Correlation Between Lloyds Banking and JD Sports
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Lloyds Banking and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and JD Sports.
Diversification Opportunities for Lloyds Banking and JD Sports
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lloyds and JD Sports is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and JD Sports go up and down completely randomly.
Pair Corralation between Lloyds Banking and JD Sports
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 0.46 times more return on investment than JD Sports. However, Lloyds Banking Group is 2.17 times less risky than JD Sports. It trades about 0.05 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.02 per unit of risk. If you would invest 4,281 in Lloyds Banking Group on August 30, 2024 and sell it today you would earn a total of 1,037 from holding Lloyds Banking Group or generate 24.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. JD Sports Fashion
Performance |
| Timeline |
| Lloyds Banking Group |
| JD Sports Fashion |
Lloyds Banking and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and JD Sports
The main advantage of trading using opposite Lloyds Banking and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Lloyds Banking vs. American Homes 4 | Lloyds Banking vs. Datalogic | Lloyds Banking vs. bet at home AG | Lloyds Banking vs. Cairn Homes PLC |
| JD Sports vs. Ondine Biomedical | JD Sports vs. Europa Metals | JD Sports vs. Lendinvest PLC | JD Sports vs. Neometals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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