Correlation Between Lloyds Banking and United Airlines
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on Lloyds Banking and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and United Airlines.
Diversification Opportunities for Lloyds Banking and United Airlines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and United Airlines go up and down completely randomly.
Pair Corralation between Lloyds Banking and United Airlines
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 4.27 times less return on investment than United Airlines. But when comparing it to its historical volatility, Lloyds Banking Group is 1.72 times less risky than United Airlines. It trades about 0.04 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 86,833 in United Airlines Holdings on August 31, 2024 and sell it today you would earn a total of 109,967 from holding United Airlines Holdings or generate 126.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Lloyds Banking Group vs. United Airlines Holdings
Performance |
| Timeline |
| Lloyds Banking Group |
| United Airlines Holdings |
Lloyds Banking and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and United Airlines
The main advantage of trading using opposite Lloyds Banking and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Lloyds Banking vs. Southern Copper | Lloyds Banking vs. Ameriprise Financial | Lloyds Banking vs. The Bank of | Lloyds Banking vs. McEwen Mining |
| United Airlines vs. Southwest Airlines | United Airlines vs. McEwen Mining | United Airlines vs. Grupo Sports World | United Airlines vs. UnitedHealth Group Incorporated |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |