Correlation Between Lloyds Banking and Credit Agricole
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Credit Agricole 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 Credit Agricole 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 Credit Agricole SA, you can compare the effects of market volatilities on Lloyds Banking and Credit Agricole 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 Credit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Credit Agricole.
Diversification Opportunities for Lloyds Banking and Credit Agricole
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lloyds and Credit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Credit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole SA 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 Credit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Agricole SA has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Credit Agricole go up and down completely randomly.
Pair Corralation between Lloyds Banking and Credit Agricole
Considering the 90-day investment horizon Lloyds Banking is expected to generate 1.38 times less return on investment than Credit Agricole. In addition to that, Lloyds Banking is 1.19 times more volatile than Credit Agricole SA. It trades about 0.04 of its total potential returns per unit of risk. Credit Agricole SA is currently generating about 0.07 per unit of volatility. If you would invest 425.00 in Credit Agricole SA on September 2, 2024 and sell it today you would earn a total of 243.00 from holding Credit Agricole SA or generate 57.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Credit Agricole SA
Performance |
| Timeline |
| Lloyds Banking Group |
| Credit Agricole SA |
Lloyds Banking and Credit Agricole Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Credit Agricole
The main advantage of trading using opposite Lloyds Banking and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Credit Agricole 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 Credit Agricole will offset losses from the drop in Credit Agricole's long position.| Lloyds Banking vs. Itau Unibanco Banco | Lloyds Banking vs. Grupo Financiero Galicia | Lloyds Banking vs. Banco Macro SA | Lloyds Banking vs. Banco Santander Brasil |
| Credit Agricole vs. Piraeus Bank SA | Credit Agricole vs. Turkiye Garanti Bankasi | Credit Agricole vs. Uwharrie Capital Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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