Correlation Between Lloyds Banking and American Express
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and American Express 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 American Express 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 American Express, you can compare the effects of market volatilities on Lloyds Banking and American Express 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 American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and American Express.
Diversification Opportunities for Lloyds Banking and American Express
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and American Express go up and down completely randomly.
Pair Corralation between Lloyds Banking and American Express
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 1.36 times less return on investment than American Express. In addition to that, Lloyds Banking is 1.06 times more volatile than American Express. It trades about 0.12 of its total potential returns per unit of risk. American Express is currently generating about 0.17 per unit of volatility. If you would invest 366,276 in American Express on August 25, 2024 and sell it today you would earn a total of 248,724 from holding American Express or generate 67.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Lloyds Banking Group vs. American Express
Performance |
| Timeline |
| Lloyds Banking Group |
| American Express |
Lloyds Banking and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and American Express
The main advantage of trading using opposite Lloyds Banking and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| Lloyds Banking vs. Genworth Financial | Lloyds Banking vs. McEwen Mining | Lloyds Banking vs. Micron Technology | Lloyds Banking vs. DXC Technology |
| American Express vs. Visa Inc | American Express vs. Mastercard Incorporated | American Express vs. Gentera SAB de | American Express vs. Unifin Financiera S |
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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