Correlation Between Wells Fargo and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and Lloyds Banking Group, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Lloyds Banking.
Diversification Opportunities for Wells Fargo and Lloyds Banking
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wells and Lloyds is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo 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 Wells Fargo 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 Wells Fargo 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 Wells Fargo i.e., Wells Fargo and Lloyds Banking go up and down completely randomly.
Pair Corralation between Wells Fargo and Lloyds Banking
Assuming the 90 days trading horizon Wells Fargo is expected to generate 1.71 times less return on investment than Lloyds Banking. But when comparing it to its historical volatility, Wells Fargo is 1.08 times less risky than Lloyds Banking. It trades about 0.06 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,622 in Lloyds Banking Group on September 20, 2024 and sell it today you would earn a total of 53.00 from holding Lloyds Banking Group or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wells Fargo vs. Lloyds Banking Group
Performance |
| Timeline |
| Wells Fargo |
| Lloyds Banking Group |
Wells Fargo and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Lloyds Banking
The main advantage of trading using opposite Wells Fargo and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.| Wells Fargo vs. Lloyds Banking Group | Wells Fargo vs. salesforce inc | Wells Fargo vs. Mitsubishi UFJ Financial | Wells Fargo vs. Taiwan Semiconductor Manufacturing |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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