Correlation Between Lloyds Banking and Physiomics Plc
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Physiomics Plc 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 Physiomics Plc 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 Physiomics Plc, you can compare the effects of market volatilities on Lloyds Banking and Physiomics Plc 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 Physiomics Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Physiomics Plc.
Diversification Opportunities for Lloyds Banking and Physiomics Plc
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lloyds and Physiomics is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Physiomics Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Physiomics Plc 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 Physiomics Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Physiomics Plc has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Physiomics Plc go up and down completely randomly.
Pair Corralation between Lloyds Banking and Physiomics Plc
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 4.54 times less return on investment than Physiomics Plc. But when comparing it to its historical volatility, Lloyds Banking Group is 4.69 times less risky than Physiomics Plc. It trades about 0.21 of its potential returns per unit of risk. Physiomics Plc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Physiomics Plc on October 26, 2024 and sell it today you would earn a total of 47.00 from holding Physiomics Plc or generate 69.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Physiomics Plc
Performance |
| Timeline |
| Lloyds Banking Group |
| Physiomics Plc |
Lloyds Banking and Physiomics Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Physiomics Plc
The main advantage of trading using opposite Lloyds Banking and Physiomics Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Physiomics Plc 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 Physiomics Plc will offset losses from the drop in Physiomics Plc's long position.| Lloyds Banking vs. MoneysupermarketCom Group PLC | Lloyds Banking vs. Ebro Foods | Lloyds Banking vs. Associated British Foods | Lloyds Banking vs. Hilton Food Group |
| Physiomics Plc vs. SupplyMe Capital PLC | Physiomics Plc vs. Lloyds Banking Group | Physiomics Plc vs. Premier African Minerals | Physiomics Plc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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