Correlation Between MACOM Technology and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Lloyds Banking Group, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Lloyds Banking.
Diversification Opportunities for MACOM Technology and Lloyds Banking
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MACOM and Lloyds is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions 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 MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Lloyds Banking go up and down completely randomly.
Pair Corralation between MACOM Technology and Lloyds Banking
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.38 times more return on investment than Lloyds Banking. However, MACOM Technology is 1.38 times more volatile than Lloyds Banking Group. It trades about 0.07 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.01 per unit of risk. If you would invest 10,400 in MACOM Technology Solutions on September 26, 2024 and sell it today you would earn a total of 2,500 from holding MACOM Technology Solutions or generate 24.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
MACOM Technology Solutions vs. Lloyds Banking Group
Performance |
Timeline |
MACOM Technology Sol |
Lloyds Banking Group |
MACOM Technology and Lloyds Banking Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MACOM Technology and Lloyds Banking
The main advantage of trading using opposite MACOM Technology and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.MACOM Technology vs. Taiwan Semiconductor Manufacturing | MACOM Technology vs. Broadcom | MACOM Technology vs. Texas Instruments Incorporated | MACOM Technology vs. QUALCOMM Incorporated |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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