Correlation Between Exxon and LLOYDS
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By analyzing existing cross correlation between Exxon Mobil Corp and LLOYDS 5871 06 MAR 29, you can compare the effects of market volatilities on Exxon and LLOYDS 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 Exxon with a short position of LLOYDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and LLOYDS.
Diversification Opportunities for Exxon and LLOYDS
Excellent diversification
The 3 months correlation between Exxon and LLOYDS is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and LLOYDS 5871 06 MAR 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LLOYDS 5871 06 and Exxon 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 Exxon Mobil Corp are associated (or correlated) with LLOYDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LLOYDS 5871 06 has no effect on the direction of Exxon i.e., Exxon and LLOYDS go up and down completely randomly.
Pair Corralation between Exxon and LLOYDS
Considering the 90-day investment horizon Exxon is expected to generate 3.13 times less return on investment than LLOYDS. In addition to that, Exxon is 3.16 times more volatile than LLOYDS 5871 06 MAR 29. It trades about 0.02 of its total potential returns per unit of risk. LLOYDS 5871 06 MAR 29 is currently generating about 0.19 per unit of volatility. If you would invest 10,261 in LLOYDS 5871 06 MAR 29 on September 3, 2024 and sell it today you would earn a total of 114.00 from holding LLOYDS 5871 06 MAR 29 or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. LLOYDS 5871 06 MAR 29
Performance |
| Timeline |
| Exxon Mobil Corp |
| LLOYDS 5871 06 |
Exxon and LLOYDS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and LLOYDS
The main advantage of trading using opposite Exxon and LLOYDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, LLOYDS 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 will offset losses from the drop in LLOYDS's long position.The idea behind Exxon Mobil Corp and LLOYDS 5871 06 MAR 29 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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