Correlation Between Lloyds Banking and Walmart
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Walmart 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 Walmart 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 Walmart, you can compare the effects of market volatilities on Lloyds Banking and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Walmart.
Diversification Opportunities for Lloyds Banking and Walmart
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lloyds and Walmart is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Walmart go up and down completely randomly.
Pair Corralation between Lloyds Banking and Walmart
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 3.83 times less return on investment than Walmart. In addition to that, Lloyds Banking is 1.36 times more volatile than Walmart. It trades about 0.01 of its total potential returns per unit of risk. Walmart is currently generating about 0.04 per unit of volatility. If you would invest 8,488 in Walmart on September 24, 2024 and sell it today you would earn a total of 93.00 from holding Walmart or generate 1.1% 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. Walmart
Performance |
| Timeline |
| Lloyds Banking Group |
| Walmart |
Lloyds Banking and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Walmart
The main advantage of trading using opposite Lloyds Banking and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Lloyds Banking vs. BNP Paribas SA | Lloyds Banking vs. BNP PARIBAS ADR | Lloyds Banking vs. Intesa Sanpaolo SpA | Lloyds Banking vs. Lloyds Banking Group |
| Walmart vs. PLAYMATES TOYS | Walmart vs. Summit Materials | Walmart vs. Media and Games | Walmart vs. Applied Materials |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |