Correlation Between Lloyds Banking and ENERGY ONE
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and ENERGY ONE 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 ENERGY ONE 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 ENERGY ONE, you can compare the effects of market volatilities on Lloyds Banking and ENERGY ONE 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 ENERGY ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and ENERGY ONE.
Diversification Opportunities for Lloyds Banking and ENERGY ONE
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lloyds and ENERGY is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and ENERGY ONE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGY ONE 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 ENERGY ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGY ONE has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and ENERGY ONE go up and down completely randomly.
Pair Corralation between Lloyds Banking and ENERGY ONE
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 1.06 times less return on investment than ENERGY ONE. But when comparing it to its historical volatility, Lloyds Banking Group is 1.42 times less risky than ENERGY ONE. It trades about 0.04 of its potential returns per unit of risk. ENERGY ONE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 286.00 in ENERGY ONE on September 16, 2024 and sell it today you would earn a total of 90.00 from holding ENERGY ONE or generate 31.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. ENERGY ONE
Performance |
| Timeline |
| Lloyds Banking Group |
| ENERGY ONE |
Lloyds Banking and ENERGY ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and ENERGY ONE
The main advantage of trading using opposite Lloyds Banking and ENERGY ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, ENERGY ONE 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 ENERGY ONE will offset losses from the drop in ENERGY ONE's long position.| Lloyds Banking vs. Universal Display | Lloyds Banking vs. STMicroelectronics NV | Lloyds Banking vs. TT Electronics PLC | Lloyds Banking vs. ELECTRONIC ARTS |
| ENERGY ONE vs. Sims Metal Management | ENERGY ONE vs. CeoTronics AG | ENERGY ONE vs. Cleanaway Waste Management | ENERGY ONE vs. SLR Investment Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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