Correlation Between Sumitomo Mitsui and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui 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 Sumitomo Mitsui and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Financial and Lloyds Banking Group, you can compare the effects of market volatilities on Sumitomo Mitsui 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 Sumitomo Mitsui with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Lloyds Banking.
Diversification Opportunities for Sumitomo Mitsui and Lloyds Banking
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Lloyds is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial 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 Sumitomo Mitsui 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 Sumitomo Mitsui Financial 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 Sumitomo Mitsui i.e., Sumitomo Mitsui and Lloyds Banking go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Lloyds Banking
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 1.17 times more return on investment than Lloyds Banking. However, Sumitomo Mitsui is 1.17 times more volatile than Lloyds Banking Group. It trades about 0.53 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about -0.09 per unit of risk. If you would invest 7,065 in Sumitomo Mitsui Financial on August 28, 2024 and sell it today you would earn a total of 1,363 from holding Sumitomo Mitsui Financial or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Lloyds Banking Group
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Lloyds Banking Group |
Sumitomo Mitsui and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Lloyds Banking
The main advantage of trading using opposite Sumitomo Mitsui and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui 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.| Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Clave Indices De | Sumitomo Mitsui vs. BTG Pactual Logstica | Sumitomo Mitsui vs. Telefonaktiebolaget LM Ericsson |
| Lloyds Banking vs. Verizon Communications | Lloyds Banking vs. Automatic Data Processing | Lloyds Banking vs. Raytheon Technologies | Lloyds Banking vs. salesforce 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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