Correlation Between Lloyds Banking and Toro
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Toro 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 Toro 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 Toro, you can compare the effects of market volatilities on Lloyds Banking and Toro 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 Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Toro.
Diversification Opportunities for Lloyds Banking and Toro
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and Toro is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Toro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Toro go up and down completely randomly.
Pair Corralation between Lloyds Banking and Toro
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the Toro. In addition to that, Lloyds Banking is 1.21 times more volatile than Toro. It trades about -0.06 of its total potential returns per unit of risk. Toro is currently generating about 0.12 per unit of volatility. If you would invest 50.00 in Toro on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Toro or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Toro
Performance |
| Timeline |
| Lloyds Banking Group |
| Toro |
Lloyds Banking and Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Toro
The main advantage of trading using opposite Lloyds Banking and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro's long position.| Lloyds Banking vs. Foresight Environmental Infrastructure | Lloyds Banking vs. Ecclesiastical Insurance Office | Lloyds Banking vs. Polar Capital Technology | Lloyds Banking vs. Alfa Financial Software |
| Toro vs. Monster Beverage Corp | Toro vs. LBG Media PLC | Toro vs. AcadeMedia AB | Toro vs. Everyman Media Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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