Correlation Between Lloyds Banking and Société Générale
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Société Générale 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 Société Générale 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 Socit Gnrale Socit, you can compare the effects of market volatilities on Lloyds Banking and Société Générale 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 Société Générale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Société Générale.
Diversification Opportunities for Lloyds Banking and Société Générale
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lloyds and Société is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Socit Gnrale Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Gnrale Socit 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 Société Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Gnrale Socit has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Société Générale go up and down completely randomly.
Pair Corralation between Lloyds Banking and Société Générale
Assuming the 90 days horizon Lloyds Banking is expected to generate 1.43 times less return on investment than Société Générale. In addition to that, Lloyds Banking is 1.09 times more volatile than Socit Gnrale Socit. It trades about 0.2 of its total potential returns per unit of risk. Socit Gnrale Socit is currently generating about 0.31 per unit of volatility. If you would invest 2,800 in Socit Gnrale Socit on November 3, 2024 and sell it today you would earn a total of 490.00 from holding Socit Gnrale Socit or generate 17.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Socit Gnrale Socit
Performance |
| Timeline |
| Lloyds Banking Group |
| Socit Gnrale Socit |
Lloyds Banking and Société Générale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Société Générale
The main advantage of trading using opposite Lloyds Banking and Société Générale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Société Générale 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 Société Générale will offset losses from the drop in Société Générale's long position.| Lloyds Banking vs. PT Bank Rakyat | Lloyds Banking vs. Barclays PLC | Lloyds Banking vs. Bank Mandiri Persero | Lloyds Banking vs. China Petroleum Chemical |
| Société Générale vs. Banco De Chile | Société Générale vs. Banco Santander Brasil | Société Générale vs. CrossFirst Bankshares | Société Générale vs. Banco Bradesco SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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