Correlation Between Lloyds Banking and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on Lloyds Banking and ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and ORMAT TECHNOLOGIES.
Diversification Opportunities for Lloyds Banking and ORMAT TECHNOLOGIES
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lloyds and ORMAT is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Lloyds Banking and ORMAT TECHNOLOGIES
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the ORMAT TECHNOLOGIES. In addition to that, Lloyds Banking is 1.41 times more volatile than ORMAT TECHNOLOGIES. It trades about -0.04 of its total potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.03 per unit of volatility. If you would invest 7,404 in ORMAT TECHNOLOGIES on September 14, 2024 and sell it today you would earn a total of 44.00 from holding ORMAT TECHNOLOGIES or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| Lloyds Banking Group |
| ORMAT TECHNOLOGIES |
Lloyds Banking and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and ORMAT TECHNOLOGIES
The main advantage of trading using opposite Lloyds Banking and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES's long position.| Lloyds Banking vs. ECHO INVESTMENT ZY | Lloyds Banking vs. Japan Asia Investment | Lloyds Banking vs. GREENX METALS LTD | Lloyds Banking vs. DISTRICT METALS |
| ORMAT TECHNOLOGIES vs. TYSON FOODS A | ORMAT TECHNOLOGIES vs. EBRO FOODS | ORMAT TECHNOLOGIES vs. China Communications Services | ORMAT TECHNOLOGIES vs. CITIC Telecom International |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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