Correlation Between State Bank and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both State Bank 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 State Bank and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Lloyds Banking Group, you can compare the effects of market volatilities on State Bank 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 State Bank with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Lloyds Banking.
Diversification Opportunities for State Bank and Lloyds Banking
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Lloyds is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of 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 State Bank 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 State Bank of 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 State Bank i.e., State Bank and Lloyds Banking go up and down completely randomly.
Pair Corralation between State Bank and Lloyds Banking
Assuming the 90 days horizon State Bank of is expected to generate 0.55 times more return on investment than Lloyds Banking. However, State Bank of is 1.83 times less risky than Lloyds Banking. It trades about 0.09 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about -0.1 per unit of risk. If you would invest 8,550 in State Bank of on August 25, 2024 and sell it today you would earn a total of 350.00 from holding State Bank of or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Lloyds Banking Group
Performance |
| Timeline |
| State Bank |
| Lloyds Banking Group |
State Bank and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Lloyds Banking
The main advantage of trading using opposite State Bank and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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.| State Bank vs. THORNEY TECHS LTD | State Bank vs. ETFS Coffee ETC | State Bank vs. BioNTech SE | State Bank vs. BJs Restaurants |
| Lloyds Banking vs. HYATT HOTELS A | Lloyds Banking vs. Park Hotels Resorts | Lloyds Banking vs. MELIA HOTELS | Lloyds Banking vs. Fidelity National Information |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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