Correlation Between MercadoLibre and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both MercadoLibre 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 MercadoLibre and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MercadoLibre and Lloyds Banking Group, you can compare the effects of market volatilities on MercadoLibre 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 MercadoLibre with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of MercadoLibre and Lloyds Banking.
Diversification Opportunities for MercadoLibre and Lloyds Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MercadoLibre and Lloyds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MercadoLibre 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 MercadoLibre 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 MercadoLibre 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 MercadoLibre i.e., MercadoLibre and Lloyds Banking go up and down completely randomly.
Pair Corralation between MercadoLibre and Lloyds Banking
Assuming the 90 days trading horizon MercadoLibre is expected to generate 1.5 times more return on investment than Lloyds Banking. However, MercadoLibre is 1.5 times more volatile than Lloyds Banking Group. It trades about 0.08 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.04 per unit of risk. If you would invest 2,027,000 in MercadoLibre on September 12, 2024 and sell it today you would earn a total of 1,732,000 from holding MercadoLibre or generate 85.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MercadoLibre vs. Lloyds Banking Group
Performance |
| Timeline |
| MercadoLibre |
| Lloyds Banking Group |
MercadoLibre and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MercadoLibre and Lloyds Banking
The main advantage of trading using opposite MercadoLibre and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MercadoLibre 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.| MercadoLibre vs. Lloyds Banking Group | MercadoLibre vs. Grupo Carso SAB | MercadoLibre vs. Verizon Communications | MercadoLibre vs. Taiwan Semiconductor Manufacturing |
| Lloyds Banking vs. Apple Inc | Lloyds Banking vs. Microsoft | Lloyds Banking vs. Alphabet Inc Class A | Lloyds Banking vs. Alphabet Inc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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