Correlation Between Lloyds Banking and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Parker Hannifin 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 Parker Hannifin 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 Parker Hannifin, you can compare the effects of market volatilities on Lloyds Banking and Parker Hannifin 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 Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Parker Hannifin.
Diversification Opportunities for Lloyds Banking and Parker Hannifin
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lloyds and Parker is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin 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 Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Parker Hannifin go up and down completely randomly.
Pair Corralation between Lloyds Banking and Parker Hannifin
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 4.69 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, Lloyds Banking Group is 1.33 times less risky than Parker Hannifin. It trades about 0.06 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 58,730 in Parker Hannifin on September 2, 2024 and sell it today you would earn a total of 8,210 from holding Parker Hannifin or generate 13.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Parker Hannifin
Performance |
| Timeline |
| Lloyds Banking Group |
| Parker Hannifin |
Lloyds Banking and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Parker Hannifin
The main advantage of trading using opposite Lloyds Banking and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin's long position.| Lloyds Banking vs. BNP PARIBAS ADR | Lloyds Banking vs. Intesa Sanpaolo SpA | Lloyds Banking vs. UniCredit SpA | Lloyds Banking vs. Crdit Agricole SA |
| Parker Hannifin vs. ABB | Parker Hannifin vs. Emerson Electric Co | Parker Hannifin vs. Superior Plus Corp | Parker Hannifin vs. NMI Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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