Correlation Between Lloyds Banking and Crédit Agricole
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Crédit Agricole 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 Crédit Agricole 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 Crdit Agricole SA, you can compare the effects of market volatilities on Lloyds Banking and Crédit Agricole 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 Crédit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Crédit Agricole.
Diversification Opportunities for Lloyds Banking and Crédit Agricole
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lloyds and Crédit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA 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 Crédit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Crédit Agricole go up and down completely randomly.
Pair Corralation between Lloyds Banking and Crédit Agricole
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 1.32 times less return on investment than Crédit Agricole. In addition to that, Lloyds Banking is 1.5 times more volatile than Crdit Agricole SA. It trades about 0.03 of its total potential returns per unit of risk. Crdit Agricole SA is currently generating about 0.06 per unit of volatility. If you would invest 906.00 in Crdit Agricole SA on October 15, 2024 and sell it today you would earn a total of 445.00 from holding Crdit Agricole SA or generate 49.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Crdit Agricole SA
Performance |
| Timeline |
| Lloyds Banking Group |
| Crdit Agricole SA |
Lloyds Banking and Crédit Agricole Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Crédit Agricole
The main advantage of trading using opposite Lloyds Banking and Crédit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Crédit Agricole 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 Crédit Agricole will offset losses from the drop in Crédit Agricole's long position.| Lloyds Banking vs. United Natural Foods | Lloyds Banking vs. APPLIED MATERIALS | Lloyds Banking vs. SANOK RUBBER ZY | Lloyds Banking vs. BG Foods |
| Crédit Agricole vs. Sterling Construction | Crédit Agricole vs. AM EAGLE OUTFITTERS | Crédit Agricole vs. Daito Trust Construction | Crédit Agricole vs. Hanison Construction 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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