Correlation Between Lloyds Banking and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Emerson Electric 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 Emerson Electric 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 Emerson Electric Co, you can compare the effects of market volatilities on Lloyds Banking and Emerson Electric 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 Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Emerson Electric.
Diversification Opportunities for Lloyds Banking and Emerson Electric
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lloyds and Emerson is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Emerson Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric 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 Emerson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Electric has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Emerson Electric go up and down completely randomly.
Pair Corralation between Lloyds Banking and Emerson Electric
If you would invest 6,055 in Lloyds Banking Group on January 17, 2025 and sell it today you would earn a total of 1,545 from holding Lloyds Banking Group or generate 25.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lloyds Banking Group vs. Emerson Electric Co
Performance |
| Timeline |
| Lloyds Banking Group |
| Emerson Electric |
Lloyds Banking and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Emerson Electric
The main advantage of trading using opposite Lloyds Banking and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Emerson Electric 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 Emerson Electric will offset losses from the drop in Emerson Electric's long position.| Lloyds Banking vs. Applied Materials | Lloyds Banking vs. United States Steel | Lloyds Banking vs. Grupo Sports World | Lloyds Banking vs. CVS Health |
| Emerson Electric vs. GMxico Transportes SAB | Emerson Electric vs. Uber Technologies, | Emerson Electric vs. Martin Marietta Materials | Emerson Electric vs. Verizon Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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