Correlation Between Lloyds Banking and STOMO MITSUI
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and STOMO MITSUI 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 STOMO MITSUI 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 STOMO MITSUI FINL, you can compare the effects of market volatilities on Lloyds Banking and STOMO MITSUI 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 STOMO MITSUI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and STOMO MITSUI.
Diversification Opportunities for Lloyds Banking and STOMO MITSUI
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lloyds and STOMO is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and STOMO MITSUI FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STOMO MITSUI FINL 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 STOMO MITSUI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STOMO MITSUI FINL has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and STOMO MITSUI go up and down completely randomly.
Pair Corralation between Lloyds Banking and STOMO MITSUI
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the STOMO MITSUI. But the stock apears to be less risky and, when comparing its historical volatility, Lloyds Banking Group is 1.17 times less risky than STOMO MITSUI. The stock trades about -0.08 of its potential returns per unit of risk. The STOMO MITSUI FINL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,213 in STOMO MITSUI FINL on September 20, 2024 and sell it today you would earn a total of 46.00 from holding STOMO MITSUI FINL or generate 2.08% 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. STOMO MITSUI FINL
Performance |
| Timeline |
| Lloyds Banking Group |
| STOMO MITSUI FINL |
Lloyds Banking and STOMO MITSUI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and STOMO MITSUI
The main advantage of trading using opposite Lloyds Banking and STOMO MITSUI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, STOMO MITSUI 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 STOMO MITSUI will offset losses from the drop in STOMO MITSUI's long position.The idea behind Lloyds Banking Group and STOMO MITSUI FINL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| STOMO MITSUI vs. Apple Inc | STOMO MITSUI vs. Apple Inc | STOMO MITSUI vs. Apple Inc | STOMO MITSUI vs. Microsoft |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |