Correlation Between Lloyds Banking and Alior Bank
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Alior Bank 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 Alior Bank 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 Alior Bank SA, you can compare the effects of market volatilities on Lloyds Banking and Alior Bank 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 Alior Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Alior Bank.
Diversification Opportunities for Lloyds Banking and Alior Bank
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lloyds and Alior is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Alior Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alior Bank 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 Alior Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alior Bank SA has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Alior Bank go up and down completely randomly.
Pair Corralation between Lloyds Banking and Alior Bank
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 1.53 times more return on investment than Alior Bank. However, Lloyds Banking is 1.53 times more volatile than Alior Bank SA. It trades about 0.04 of its potential returns per unit of risk. Alior Bank SA is currently generating about 0.0 per unit of risk. If you would invest 4,165 in Lloyds Banking Group on September 3, 2024 and sell it today you would earn a total of 1,141 from holding Lloyds Banking Group or generate 27.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lloyds Banking Group vs. Alior Bank SA
Performance |
| Timeline |
| Lloyds Banking Group |
| Alior Bank SA |
Lloyds Banking and Alior Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Alior Bank
The main advantage of trading using opposite Lloyds Banking and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Alior Bank 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 Alior Bank will offset losses from the drop in Alior Bank's long position.| Lloyds Banking vs. Alior Bank SA | Lloyds Banking vs. AcadeMedia AB | Lloyds Banking vs. Intermediate Capital Group | Lloyds Banking vs. Liberty Media Corp |
| Alior Bank vs. Endeavour Mining Corp | Alior Bank vs. AMG Advanced Metallurgical | Alior Bank vs. Thor Mining PLC | Alior Bank vs. iShares Physical Silver |
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.
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