Correlation Between VersaBank and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both VersaBank 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 VersaBank and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Lloyds Banking Group, you can compare the effects of market volatilities on VersaBank 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 VersaBank with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Lloyds Banking.
Diversification Opportunities for VersaBank and Lloyds Banking
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VersaBank and Lloyds is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank 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 VersaBank 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 VersaBank 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 VersaBank i.e., VersaBank and Lloyds Banking go up and down completely randomly.
Pair Corralation between VersaBank and Lloyds Banking
Given the investment horizon of 90 days VersaBank is expected to generate 1.13 times more return on investment than Lloyds Banking. However, VersaBank is 1.13 times more volatile than Lloyds Banking Group. It trades about 0.1 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 678.00 in VersaBank on August 27, 2024 and sell it today you would earn a total of 1,034 from holding VersaBank or generate 152.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Lloyds Banking Group
Performance |
| Timeline |
| VersaBank |
| Lloyds Banking Group |
VersaBank and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Lloyds Banking
The main advantage of trading using opposite VersaBank and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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.| VersaBank vs. Fifth Third Bancorp | VersaBank vs. Zions Bancorporation | VersaBank vs. Huntington Bancshares Incorporated | VersaBank vs. PNC Financial Services |
| Lloyds Banking vs. Itau Unibanco Banco | Lloyds Banking vs. Grupo Financiero Galicia | Lloyds Banking vs. Banco Macro SA | Lloyds Banking vs. Banco Santander Brasil |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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