Correlation Between Lloyds Banking and FC Investment
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and FC Investment 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 FC Investment 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 FC Investment Trust, you can compare the effects of market volatilities on Lloyds Banking and FC Investment 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 FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and FC Investment.
Diversification Opportunities for Lloyds Banking and FC Investment
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lloyds and FCIT is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and FC Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FC Investment Trust 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 FC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FC Investment Trust has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and FC Investment go up and down completely randomly.
Pair Corralation between Lloyds Banking and FC Investment
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the FC Investment. In addition to that, Lloyds Banking is 1.95 times more volatile than FC Investment Trust. It trades about -0.12 of its total potential returns per unit of risk. FC Investment Trust is currently generating about 0.21 per unit of volatility. If you would invest 110,800 in FC Investment Trust on September 12, 2024 and sell it today you would earn a total of 2,800 from holding FC Investment Trust or generate 2.53% 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. FC Investment Trust
Performance |
| Timeline |
| Lloyds Banking Group |
| FC Investment Trust |
Lloyds Banking and FC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and FC Investment
The main advantage of trading using opposite Lloyds Banking and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, FC Investment 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 FC Investment will offset losses from the drop in FC Investment's long position.| Lloyds Banking vs. Foresight Environmental Infrastructure | Lloyds Banking vs. Ecclesiastical Insurance Office | Lloyds Banking vs. Polar Capital Technology | Lloyds Banking vs. Alfa Financial Software |
| FC Investment vs. UNIQA Insurance Group | FC Investment vs. Zurich Insurance Group | FC Investment vs. Axfood AB | FC Investment vs. European Metals Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |