Correlation Between MP Materials and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both MP Materials and Lloyds Banking 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 MP Materials and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MP Materials Corp and Lloyds Banking Group, you can compare the effects of market volatilities on MP Materials and Lloyds Banking 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 MP Materials with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of MP Materials and Lloyds Banking.
Diversification Opportunities for MP Materials and Lloyds Banking
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between M2PM34 and Lloyds is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding MP Materials Corp and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group and MP Materials 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 MP Materials Corp are associated (or correlated) with Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of MP Materials i.e., MP Materials and Lloyds Banking go up and down completely randomly.
Pair Corralation between MP Materials and Lloyds Banking
Assuming the 90 days trading horizon MP Materials Corp is expected to under-perform the Lloyds Banking. In addition to that, MP Materials is 1.34 times more volatile than Lloyds Banking Group. It trades about -0.01 of its total potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.05 per unit of volatility. If you would invest 1,131 in Lloyds Banking Group on October 11, 2024 and sell it today you would earn a total of 603.00 from holding Lloyds Banking Group or generate 53.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.37% |
| Values | Daily Returns |
MP Materials Corp vs. Lloyds Banking Group
Performance |
| Timeline |
| MP Materials Corp |
| Lloyds Banking Group |
MP Materials and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MP Materials and Lloyds Banking
The main advantage of trading using opposite MP Materials and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MP Materials position performs unexpectedly, Lloyds Banking 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 Lloyds Banking will offset losses from the drop in Lloyds Banking's long position.| MP Materials vs. Marfrig Global Foods | MP Materials vs. New Oriental Education | MP Materials vs. Monster Beverage | MP Materials vs. Tyson Foods |
| Lloyds Banking vs. Darden Restaurants, | Lloyds Banking vs. Metalurgica Gerdau SA | Lloyds Banking vs. Clover Health Investments, | Lloyds Banking vs. CVS Health |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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