Correlation Between Lloyds Banking and BH Macro
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and BH Macro 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 BH Macro 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 BH Macro Limited, you can compare the effects of market volatilities on Lloyds Banking and BH Macro 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 BH Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and BH Macro.
Diversification Opportunities for Lloyds Banking and BH Macro
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lloyds and BHMU is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro Limited 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 BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and BH Macro go up and down completely randomly.
Pair Corralation between Lloyds Banking and BH Macro
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the BH Macro. In addition to that, Lloyds Banking is 1.17 times more volatile than BH Macro Limited. It trades about 0.0 of its total potential returns per unit of risk. BH Macro Limited is currently generating about 0.08 per unit of volatility. If you would invest 374.00 in BH Macro Limited on September 5, 2024 and sell it today you would earn a total of 44.00 from holding BH Macro Limited or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Lloyds Banking Group vs. BH Macro Limited
Performance |
| Timeline |
| Lloyds Banking Group |
| BH Macro Limited |
Lloyds Banking and BH Macro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and BH Macro
The main advantage of trading using opposite Lloyds Banking and BH Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, BH Macro 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 BH Macro will offset losses from the drop in BH Macro's long position.| Lloyds Banking vs. AcadeMedia AB | Lloyds Banking vs. mobilezone holding AG | Lloyds Banking vs. One Media iP | Lloyds Banking vs. LBG Media PLC |
| BH Macro vs. Trainline Plc | BH Macro vs. Roadside Real Estate | BH Macro vs. JB Hunt Transport | BH Macro vs. EVS Broadcast Equipment |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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