Correlation Between Lloyds Banking and Bancorp
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Bancorp 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 Bancorp 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 The Bancorp, you can compare the effects of market volatilities on Lloyds Banking and Bancorp 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 Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Bancorp.
Diversification Opportunities for Lloyds Banking and Bancorp
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lloyds and Bancorp is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and The Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancorp 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 Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancorp has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Bancorp go up and down completely randomly.
Pair Corralation between Lloyds Banking and Bancorp
Assuming the 90 days horizon Lloyds Banking Group is expected to generate 1.87 times more return on investment than Bancorp. However, Lloyds Banking is 1.87 times more volatile than The Bancorp. It trades about 0.04 of its potential returns per unit of risk. The Bancorp is currently generating about 0.06 per unit of risk. If you would invest 53.00 in Lloyds Banking Group on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Lloyds Banking Group or generate 24.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.86% |
| Values | Daily Returns |
Lloyds Banking Group vs. The Bancorp
Performance |
| Timeline |
| Lloyds Banking Group |
| Bancorp |
Lloyds Banking and Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Bancorp
The main advantage of trading using opposite Lloyds Banking and Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Bancorp 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 Bancorp will offset losses from the drop in Bancorp's long position.| Lloyds Banking vs. First Hawaiian | Lloyds Banking vs. Central Pacific Financial | Lloyds Banking vs. Territorial Bancorp | Lloyds Banking vs. Comerica |
| Bancorp vs. Heartland Financial USA | Bancorp vs. Heritage Commerce Corp | Bancorp vs. Business First Bancshares | Bancorp vs. German American Bancorp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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