Correlation Between Lloyds Banking and LG Display
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and LG Display 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 LG Display 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 LG Display Co, you can compare the effects of market volatilities on Lloyds Banking and LG Display 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 LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and LG Display.
Diversification Opportunities for Lloyds Banking and LG Display
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lloyds and LGA is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display 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 LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and LG Display go up and down completely randomly.
Pair Corralation between Lloyds Banking and LG Display
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 1.0 times more return on investment than LG Display. However, Lloyds Banking Group is 1.0 times less risky than LG Display. It trades about 0.03 of its potential returns per unit of risk. LG Display Co is currently generating about -0.04 per unit of risk. If you would invest 229.00 in Lloyds Banking Group on September 3, 2024 and sell it today you would earn a total of 19.00 from holding Lloyds Banking Group or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. LG Display Co
Performance |
| Timeline |
| Lloyds Banking Group |
| LG Display |
Lloyds Banking and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and LG Display
The main advantage of trading using opposite Lloyds Banking and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| Lloyds Banking vs. National Bank Holdings | Lloyds Banking vs. Tradegate AG Wertpapierhandelsbank | Lloyds Banking vs. GUARDANT HEALTH CL | Lloyds Banking vs. National Health Investors |
| LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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