Correlation Between Visa and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Lloyds Banking Group, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lloyds Banking.
Diversification Opportunities for Visa and Lloyds Banking
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Lloyds is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Lloyds Banking go up and down completely randomly.
Pair Corralation between Visa and Lloyds Banking
Taking into account the 90-day investment horizon Visa is expected to generate 1.68 times less return on investment than Lloyds Banking. But when comparing it to its historical volatility, Visa Class A is 4.41 times less risky than Lloyds Banking. It trades about 0.1 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Lloyds Banking Group on September 2, 2024 and sell it today you would earn a total of 12.00 from holding Lloyds Banking Group or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.18% |
| Values | Daily Returns |
Visa Class A vs. Lloyds Banking Group
Performance |
| Timeline |
| Visa Class A |
| Lloyds Banking Group |
Visa and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lloyds Banking
The main advantage of trading using opposite Visa and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Lloyds Banking vs. Piraeus Bank SA | Lloyds Banking vs. Turkiye Garanti Bankasi | Lloyds Banking vs. Uwharrie Capital Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |