Correlation Between Lloyds Banking and Impax Environmental
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Impax 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 Impax 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 Impax Environmental Markets, you can compare the effects of market volatilities on Lloyds Banking and Impax 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 Impax Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Impax Environmental.
Diversification Opportunities for Lloyds Banking and Impax Environmental
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lloyds and Impax is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Impax Environmental Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax 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 Impax Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Environmental has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Impax Environmental go up and down completely randomly.
Pair Corralation between Lloyds Banking and Impax Environmental
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the Impax Environmental. In addition to that, Lloyds Banking is 2.03 times more volatile than Impax Environmental Markets. It trades about -0.07 of its total potential returns per unit of risk. Impax Environmental Markets is currently generating about -0.02 per unit of volatility. If you would invest 38,000 in Impax Environmental Markets on September 4, 2024 and sell it today you would lose (400.00) from holding Impax Environmental Markets or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Impax Environmental Markets
Performance |
| Timeline |
| Lloyds Banking Group |
| Impax Environmental |
Lloyds Banking and Impax Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Impax Environmental
The main advantage of trading using opposite Lloyds Banking and Impax Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Impax 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 Impax Environmental will offset losses from the drop in Impax Environmental's long position.| Lloyds Banking vs. Samsung Electronics Co | Lloyds Banking vs. Samsung Electronics Co | Lloyds Banking vs. Hyundai Motor | Lloyds Banking vs. Toyota Motor Corp |
| Impax Environmental vs. SupplyMe Capital PLC | Impax Environmental vs. Lloyds Banking Group | Impax Environmental vs. Premier African Minerals | Impax Environmental vs. SANTANDER UK 8 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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