Correlation Between Lloyds Banking and Foresight Environmental
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Foresight Environmental 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 Foresight Environmental 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 Foresight Environmental Infrastructure, you can compare the effects of market volatilities on Lloyds Banking and Foresight Environmental 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 Foresight Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Foresight Environmental.
Diversification Opportunities for Lloyds Banking and Foresight Environmental
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lloyds and Foresight is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental 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 Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Foresight Environmental go up and down completely randomly.
Pair Corralation between Lloyds Banking and Foresight Environmental
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 1.19 times more return on investment than Foresight Environmental. However, Lloyds Banking is 1.19 times more volatile than Foresight Environmental Infrastructure. It trades about 0.07 of its potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about -0.05 per unit of risk. If you would invest 3,991 in Lloyds Banking Group on September 12, 2024 and sell it today you would earn a total of 1,303 from holding Lloyds Banking Group or generate 32.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Foresight Environmental Infras
Performance |
| Timeline |
| Lloyds Banking Group |
| Foresight Environmental |
Lloyds Banking and Foresight Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Foresight Environmental
The main advantage of trading using opposite Lloyds Banking and Foresight Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Foresight Environmental 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 Foresight Environmental will offset losses from the drop in Foresight Environmental'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 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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