Correlation Between Lloyds Banking and Liontrust Asset
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Liontrust Asset 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 Liontrust Asset 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 Liontrust Asset Management, you can compare the effects of market volatilities on Lloyds Banking and Liontrust Asset 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 Liontrust Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Liontrust Asset.
Diversification Opportunities for Lloyds Banking and Liontrust Asset
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lloyds and Liontrust is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana 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 Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Liontrust Asset go up and down completely randomly.
Pair Corralation between Lloyds Banking and Liontrust Asset
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the Liontrust Asset. But the stock apears to be less risky and, when comparing its historical volatility, Lloyds Banking Group is 2.06 times less risky than Liontrust Asset. The stock trades about -0.11 of its potential returns per unit of risk. The Liontrust Asset Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 44,248 in Liontrust Asset Management on September 5, 2024 and sell it today you would earn a total of 702.00 from holding Liontrust Asset Management or generate 1.59% 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. Liontrust Asset Management
Performance |
| Timeline |
| Lloyds Banking Group |
| Liontrust Asset Mana |
Lloyds Banking and Liontrust Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Liontrust Asset
The main advantage of trading using opposite Lloyds Banking and Liontrust Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Liontrust Asset 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 Liontrust Asset will offset losses from the drop in Liontrust Asset'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 |
| Liontrust Asset vs. CNH Industrial NV | Liontrust Asset vs. Innovative Industrial Properties | Liontrust Asset vs. Gamma Communications PLC | Liontrust Asset vs. Aeorema Communications Plc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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