Correlation Between Lloyds Banking and Ford
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Ford 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 Ford 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 Ford Motor, you can compare the effects of market volatilities on Lloyds Banking and Ford 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 Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Ford.
Diversification Opportunities for Lloyds Banking and Ford
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and Ford is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Ford go up and down completely randomly.
Pair Corralation between Lloyds Banking and Ford
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 0.88 times more return on investment than Ford. However, Lloyds Banking Group is 1.14 times less risky than Ford. It trades about 0.04 of its potential returns per unit of risk. Ford Motor is currently generating about 0.03 per unit of risk. If you would invest 4,225 in Lloyds Banking Group on September 14, 2024 and sell it today you would earn a total of 725.00 from holding Lloyds Banking Group or generate 17.16% 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. Ford Motor
Performance |
| Timeline |
| Lloyds Banking Group |
| Ford Motor |
Lloyds Banking and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Ford
The main advantage of trading using opposite Lloyds Banking and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Lloyds Banking vs. Apple Inc | Lloyds Banking vs. Microsoft | Lloyds Banking vs. Alphabet Inc Class A | Lloyds Banking vs. Alphabet Inc |
| Ford vs. UnitedHealth Group Incorporated | Ford vs. Lloyds Banking Group | Ford vs. Micron Technology | Ford vs. GMxico Transportes SAB |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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