Correlation Between LLOYDS METALS and Federal Bank

Can any of the company-specific risk be diversified away by investing in both LLOYDS METALS and Federal Bank 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 LLOYDS METALS and Federal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LLOYDS METALS AND and The Federal Bank, you can compare the effects of market volatilities on LLOYDS METALS and Federal Bank 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 LLOYDS METALS with a short position of Federal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of LLOYDS METALS and Federal Bank.

Diversification Opportunities for LLOYDS METALS and Federal Bank

0.54

Correlation Coefficient

LLOYDS METALS  Federal Bank

Very weak diversification

The 3 months correlation between LLOYDS and Federal is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding LLOYDS METALS AND and The Federal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Bank and LLOYDS METALS 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 LLOYDS METALS AND are associated (or correlated) with Federal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Bank has no effect on the direction of LLOYDS METALS i.e., LLOYDS METALS and Federal Bank go up and down completely randomly.

Pair Corralation between LLOYDS METALS and Federal Bank

Assuming the 90 days trading horizon LLOYDS METALS AND is expected to generate 1.27 times more return on investment than Federal Bank. However, LLOYDS METALS is 1.27 times more volatile than The Federal Bank. It trades about 0.18 of its potential returns per unit of risk. The Federal Bank is currently generating about 0.04 per unit of risk. If you would invest  87,120  in LLOYDS METALS AND on September 23, 2024 and sell it today you would earn a total of  26,380  from holding LLOYDS METALS AND or generate 30.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

LLOYDS METALS AND  vs.  The Federal Bank

LLOYDS METALS AND

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, LLOYDS METALS displayed solid returns over the last few months and may actually be approaching a breakup point.

Federal Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Federal Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Federal Bank is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with LLOYDS METALS and Federal Bank

The main advantage of trading using opposite LLOYDS METALS and Federal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LLOYDS METALS position performs unexpectedly, Federal Bank 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 Federal Bank will offset losses from the drop in Federal Bank's long position.

The idea behind LLOYDS METALS AND and The Federal Bank 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.