Correlation Between Lloyds Banking and Devon Energy
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Devon Energy 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 Devon Energy 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 Devon Energy, you can compare the effects of market volatilities on Lloyds Banking and Devon Energy 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 Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Devon Energy.
Diversification Opportunities for Lloyds Banking and Devon Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and Devon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy 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 Devon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Devon Energy has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Devon Energy go up and down completely randomly.
Pair Corralation between Lloyds Banking and Devon Energy
If you would invest 4,950 in Lloyds Banking Group on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Lloyds Banking Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lloyds Banking Group vs. Devon Energy
Performance |
| Timeline |
| Lloyds Banking Group |
| Devon Energy |
Lloyds Banking and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Devon Energy
The main advantage of trading using opposite Lloyds Banking and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Devon Energy 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 Devon Energy will offset losses from the drop in Devon Energy's long position.| Lloyds Banking vs. Apple Inc | Lloyds Banking vs. Microsoft | Lloyds Banking vs. Alphabet Inc Class A | Lloyds Banking vs. Alphabet Inc |
| Devon Energy vs. Monster Beverage Corp | Devon Energy vs. Capital One Financial | Devon Energy vs. Grupo Sports World | Devon Energy vs. FibraHotel |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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