Correlation Between Lloyds Banking and Spire Healthcare
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Spire Healthcare 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 Spire Healthcare 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 Spire Healthcare Group, you can compare the effects of market volatilities on Lloyds Banking and Spire Healthcare 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 Spire Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Spire Healthcare.
Diversification Opportunities for Lloyds Banking and Spire Healthcare
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lloyds and Spire is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Spire Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Healthcare 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 Spire Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Healthcare has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Spire Healthcare go up and down completely randomly.
Pair Corralation between Lloyds Banking and Spire Healthcare
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the Spire Healthcare. In addition to that, Lloyds Banking is 1.04 times more volatile than Spire Healthcare Group. It trades about -0.08 of its total potential returns per unit of risk. Spire Healthcare Group is currently generating about 0.18 per unit of volatility. If you would invest 21,600 in Spire Healthcare Group on September 21, 2024 and sell it today you would earn a total of 900.00 from holding Spire Healthcare Group or generate 4.17% 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. Spire Healthcare Group
Performance |
| Timeline |
| Lloyds Banking Group |
| Spire Healthcare |
Lloyds Banking and Spire Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Spire Healthcare
The main advantage of trading using opposite Lloyds Banking and Spire Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Spire Healthcare 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 Spire Healthcare will offset losses from the drop in Spire Healthcare'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 |
| Spire Healthcare vs. SupplyMe Capital PLC | Spire Healthcare vs. Lloyds Banking Group | Spire Healthcare vs. Premier African Minerals | Spire Healthcare 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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