Correlation Between Lloyds Banking and VP Bank
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and VP Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lloyds Banking and VP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lloyds Banking Group and VP Bank AG, you can compare the effects of market volatilities on Lloyds Banking and VP Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lloyds Banking with a short position of VP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and VP Bank.
Diversification Opportunities for Lloyds Banking and VP Bank
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lloyds and 3VFN is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and VP Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VP Bank AG and Lloyds Banking is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lloyds Banking Group are associated (or correlated) with VP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VP Bank AG has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and VP Bank go up and down completely randomly.
Pair Corralation between Lloyds Banking and VP Bank
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the VP Bank. In addition to that, Lloyds Banking is 1.11 times more volatile than VP Bank AG. It trades about -0.09 of its total potential returns per unit of risk. VP Bank AG is currently generating about 0.33 per unit of volatility. If you would invest 7,350 in VP Bank AG on September 13, 2024 and sell it today you would earn a total of 800.00 from holding VP Bank AG or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lloyds Banking Group vs. VP Bank AG
Performance |
| Timeline |
| Lloyds Banking Group |
| VP Bank AG |
Lloyds Banking and VP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and VP Bank
The main advantage of trading using opposite Lloyds Banking and VP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, VP Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in VP Bank will offset losses from the drop in VP Bank's long position.| Lloyds Banking vs. Motorcar Parts of | Lloyds Banking vs. Rayonier Advanced Materials | Lloyds Banking vs. Geely Automobile Holdings | Lloyds Banking vs. Summit Materials |
| VP Bank vs. Molson Coors Beverage | VP Bank vs. SCANSOURCE | VP Bank vs. Jacquet Metal Service | VP Bank vs. MCEWEN MINING INC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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