Correlation Between Lloyds Banking and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Goldman Sachs 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 Goldman Sachs 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 The Goldman Sachs, you can compare the effects of market volatilities on Lloyds Banking and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Goldman Sachs.
Diversification Opportunities for Lloyds Banking and Goldman Sachs
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lloyds and Goldman is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Goldman Sachs go up and down completely randomly.
Pair Corralation between Lloyds Banking and Goldman Sachs
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 3.7 times more return on investment than Goldman Sachs. However, Lloyds Banking is 3.7 times more volatile than The Goldman Sachs. It trades about 0.21 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.31 per unit of risk. If you would invest 4,950 in Lloyds Banking Group on November 3, 2024 and sell it today you would earn a total of 1,274 from holding Lloyds Banking Group or generate 25.74% 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. The Goldman Sachs
Performance |
| Timeline |
| Lloyds Banking Group |
| Goldman Sachs |
Lloyds Banking and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Goldman Sachs
The main advantage of trading using opposite Lloyds Banking and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Lloyds Banking vs. Grupo Sports World | Lloyds Banking vs. Monster Beverage Corp | Lloyds Banking vs. McEwen Mining | Lloyds Banking vs. First Republic Bank |
| Goldman Sachs vs. FIBRA Storage | Goldman Sachs vs. Martin Marietta Materials | Goldman Sachs vs. Applied Materials | Goldman Sachs vs. United States Steel |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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