Correlation Between Lloyds Banking and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Zegona Communications 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 Zegona Communications 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 Zegona Communications Plc, you can compare the effects of market volatilities on Lloyds Banking and Zegona Communications 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Zegona Communications.
Diversification Opportunities for Lloyds Banking and Zegona Communications
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lloyds and Zegona is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Zegona Communications go up and down completely randomly.
Pair Corralation between Lloyds Banking and Zegona Communications
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 14.04 times less return on investment than Zegona Communications. But when comparing it to its historical volatility, Lloyds Banking Group is 11.52 times less risky than Zegona Communications. It trades about 0.04 of its potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,650 in Zegona Communications Plc on November 5, 2024 and sell it today you would earn a total of 39,350 from holding Zegona Communications Plc or generate 514.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.96% |
| Values | Daily Returns |
Lloyds Banking Group vs. Zegona Communications Plc
Performance |
| Timeline |
| Lloyds Banking Group |
| Zegona Communications Plc |
Lloyds Banking and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Zegona Communications
The main advantage of trading using opposite Lloyds Banking and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Zegona Communications 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 Zegona Communications will offset losses from the drop in Zegona Communications' long position.| Lloyds Banking vs. JB Hunt Transport | Lloyds Banking vs. Aeorema Communications Plc | Lloyds Banking vs. Infrastrutture Wireless Italiane | Lloyds Banking vs. UNIQA Insurance Group |
| Zegona Communications vs. Ameriprise Financial | Zegona Communications vs. Sydbank | Zegona Communications vs. Global Net Lease | Zegona Communications vs. United States Steel |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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