Correlation Between Lloyds Banking and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Prudential Financial 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 Prudential Financial 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 Prudential Financial, you can compare the effects of market volatilities on Lloyds Banking and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Prudential Financial.
Diversification Opportunities for Lloyds Banking and Prudential Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and Prudential is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Prudential Financial go up and down completely randomly.
Pair Corralation between Lloyds Banking and Prudential Financial
If you would invest 198,872 in Prudential Financial on September 2, 2024 and sell it today you would earn a total of 2,628 from holding Prudential Financial or generate 1.32% 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. Prudential Financial
Performance |
| Timeline |
| Lloyds Banking Group |
| Prudential Financial |
Lloyds Banking and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Prudential Financial
The main advantage of trading using opposite Lloyds Banking and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Lloyds Banking vs. Apple Inc | Lloyds Banking vs. Microsoft | Lloyds Banking vs. Alphabet Inc Class A | Lloyds Banking vs. Alphabet Inc |
| Prudential Financial vs. First Republic Bank | Prudential Financial vs. Deutsche Bank Aktiengesellschaft | Prudential Financial vs. Cognizant Technology Solutions | Prudential Financial vs. Southwest Airlines |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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