Correlation Between Lloyds Banking and Mastercard Incorporated
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Mastercard Incorporated 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 Mastercard Incorporated 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 Mastercard Incorporated, you can compare the effects of market volatilities on Lloyds Banking and Mastercard Incorporated 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 Mastercard Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Mastercard Incorporated.
Diversification Opportunities for Lloyds Banking and Mastercard Incorporated
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and Mastercard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated 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 Mastercard Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard Incorporated has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Mastercard Incorporated go up and down completely randomly.
Pair Corralation between Lloyds Banking and Mastercard Incorporated
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 1.48 times less return on investment than Mastercard Incorporated. In addition to that, Lloyds Banking is 1.19 times more volatile than Mastercard Incorporated. It trades about 0.04 of its total potential returns per unit of risk. Mastercard Incorporated is currently generating about 0.08 per unit of volatility. If you would invest 693,538 in Mastercard Incorporated on September 4, 2024 and sell it today you would earn a total of 385,962 from holding Mastercard Incorporated or generate 55.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lloyds Banking Group vs. Mastercard Incorporated
Performance |
| Timeline |
| Lloyds Banking Group |
| Mastercard Incorporated |
Lloyds Banking and Mastercard Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Mastercard Incorporated
The main advantage of trading using opposite Lloyds Banking and Mastercard Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Mastercard Incorporated 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 Mastercard Incorporated will offset losses from the drop in Mastercard Incorporated's long position.| Lloyds Banking vs. United States Steel | Lloyds Banking vs. First Republic Bank | Lloyds Banking vs. Ameriprise Financial | Lloyds Banking vs. DXC Technology |
| Mastercard Incorporated vs. Capital One Financial | Mastercard Incorporated vs. The Western Union | Mastercard Incorporated vs. Gentera SAB de | Mastercard Incorporated vs. Financiera Independencia 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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