Correlation Between Lloyds Banking and Bristol Myers
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Bristol Myers 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 Bristol Myers 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 Bristol Myers Squibb, you can compare the effects of market volatilities on Lloyds Banking and Bristol Myers 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 Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Bristol Myers.
Diversification Opportunities for Lloyds Banking and Bristol Myers
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and Bristol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb 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 Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Bristol Myers go up and down completely randomly.
Pair Corralation between Lloyds Banking and Bristol Myers
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 1.71 times less return on investment than Bristol Myers. But when comparing it to its historical volatility, Lloyds Banking Group is 1.05 times less risky than Bristol Myers. It trades about 0.04 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 84,732 in Bristol Myers Squibb on September 14, 2024 and sell it today you would earn a total of 29,668 from holding Bristol Myers Squibb or generate 35.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Bristol Myers Squibb
Performance |
| Timeline |
| Lloyds Banking Group |
| Bristol Myers Squibb |
Lloyds Banking and Bristol Myers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Bristol Myers
The main advantage of trading using opposite Lloyds Banking and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Bristol Myers 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 Bristol Myers will offset losses from the drop in Bristol Myers' long position.| Lloyds Banking vs. Apple Inc | Lloyds Banking vs. Microsoft | Lloyds Banking vs. Alphabet Inc Class A | Lloyds Banking vs. Alphabet Inc |
| Bristol Myers vs. Merck Company | Bristol Myers vs. Roche Holding AG | Bristol Myers vs. Amgen Inc | Bristol Myers vs. Biogen Inc |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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