Correlation Between Lloyds Banking and Vale SA
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Vale SA 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 Vale SA 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 Vale SA, you can compare the effects of market volatilities on Lloyds Banking and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Vale SA.
Diversification Opportunities for Lloyds Banking and Vale SA
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lloyds and Vale is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Vale SA go up and down completely randomly.
Pair Corralation between Lloyds Banking and Vale SA
If you would invest 4,950 in Lloyds Banking Group on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Lloyds Banking Group or generate 0.0% 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. Vale SA
Performance |
| Timeline |
| Lloyds Banking Group |
| Vale SA |
Lloyds Banking and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Vale SA
The main advantage of trading using opposite Lloyds Banking and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| Lloyds Banking vs. Apple Inc | Lloyds Banking vs. Microsoft | Lloyds Banking vs. Alphabet Inc Class A | Lloyds Banking vs. Alphabet Inc |
| Vale SA vs. Compaa Minera Autln | Vale SA vs. McEwen Mining | Vale SA vs. The Select Sector | Vale SA vs. Promotora y Operadora |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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