Correlation Between Microsoft and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Lloyds Banking Group, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Lloyds Banking.
Diversification Opportunities for Microsoft and Lloyds Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Lloyds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Lloyds Banking go up and down completely randomly.
Pair Corralation between Microsoft and Lloyds Banking
If you would invest 875,486 in Microsoft on August 31, 2024 and sell it today you would earn a total of 7,514 from holding Microsoft or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Lloyds Banking Group
Performance |
| Timeline |
| Microsoft |
| Lloyds Banking Group |
Microsoft and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Lloyds Banking
The main advantage of trading using opposite Microsoft and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Micron Technology | Microsoft vs. GMxico Transportes SAB | Microsoft vs. Taiwan Semiconductor Manufacturing | Microsoft vs. Grupo Sports World |
| Lloyds Banking vs. Southern Copper | Lloyds Banking vs. Ameriprise Financial | Lloyds Banking vs. The Bank of | Lloyds Banking vs. McEwen Mining |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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