Correlation Between Lloyds Banking and PureTech Health
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and PureTech Health 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 PureTech Health 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 PureTech Health plc, you can compare the effects of market volatilities on Lloyds Banking and PureTech Health 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 PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and PureTech Health.
Diversification Opportunities for Lloyds Banking and PureTech Health
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lloyds and PureTech is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and PureTech Health go up and down completely randomly.
Pair Corralation between Lloyds Banking and PureTech Health
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 0.16 times more return on investment than PureTech Health. However, Lloyds Banking Group is 6.24 times less risky than PureTech Health. It trades about 0.11 of its potential returns per unit of risk. PureTech Health plc is currently generating about -0.03 per unit of risk. If you would invest 11,783 in Lloyds Banking Group on August 31, 2024 and sell it today you would earn a total of 2,182 from holding Lloyds Banking Group or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. PureTech Health plc
Performance |
| Timeline |
| Lloyds Banking Group |
| PureTech Health plc |
Lloyds Banking and PureTech Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and PureTech Health
The main advantage of trading using opposite Lloyds Banking and PureTech Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, PureTech Health 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 PureTech Health will offset losses from the drop in PureTech Health's long position.| Lloyds Banking vs. Sabre Insurance Group | Lloyds Banking vs. Metals Exploration Plc | Lloyds Banking vs. UNIQA Insurance Group | Lloyds Banking vs. Neometals |
| PureTech Health vs. JD Sports Fashion | PureTech Health vs. Albion Technology General | PureTech Health vs. Accsys Technologies PLC | PureTech Health vs. Wyndham Hotels Resorts |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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