Correlation Between Lloyds Banking and Premier African
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Premier African 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 Premier African 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 Premier African Minerals, you can compare the effects of market volatilities on Lloyds Banking and Premier African 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 Premier African. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Premier African.
Diversification Opportunities for Lloyds Banking and Premier African
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lloyds and Premier is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Premier African Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier African Minerals 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 Premier African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier African Minerals has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Premier African go up and down completely randomly.
Pair Corralation between Lloyds Banking and Premier African
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the Premier African. But the stock apears to be less risky and, when comparing its historical volatility, Lloyds Banking Group is 10.69 times less risky than Premier African. The stock trades about -0.11 of its potential returns per unit of risk. The Premier African Minerals is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4.05 in Premier African Minerals on September 5, 2024 and sell it today you would earn a total of 1.80 from holding Premier African Minerals or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Premier African Minerals
Performance |
| Timeline |
| Lloyds Banking Group |
| Premier African Minerals |
Lloyds Banking and Premier African Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Premier African
The main advantage of trading using opposite Lloyds Banking and Premier African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Premier African 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 Premier African will offset losses from the drop in Premier African'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 |
| Premier African vs. Antofagasta PLC | Premier African vs. Atalaya Mining | Premier African vs. Ferrexpo PLC | Premier African vs. Amaroq Minerals |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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