Correlation Between Banco Macro and Lloyds Banking

Can any of the company-specific risk be diversified away by investing in both Banco Macro 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 Banco Macro and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco Macro SA and Lloyds Banking Group, you can compare the effects of market volatilities on Banco Macro 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 Banco Macro with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Macro and Lloyds Banking.

Diversification Opportunities for Banco Macro and Lloyds Banking

-0.87

Correlation Coefficient

Banco Macro  Lloyds Banking

Pay attention - limited upside

The 3 months correlation between Banco and Lloyds is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Banco Macro SA 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 Banco Macro 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 Banco Macro SA 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 Banco Macro i.e., Banco Macro and Lloyds Banking go up and down completely randomly.

Pair Corralation between Banco Macro and Lloyds Banking

Considering the 90-day investment horizon Banco Macro SA is expected to under-perform the Lloyds Banking. In addition to that, Banco Macro is 1.92 times more volatile than Lloyds Banking Group. It trades about -0.06 of its total potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.29 per unit of volatility. If you would invest  270.00  in Lloyds Banking Group on December 27, 2024 and sell it today you would earn a total of  114.00  from holding Lloyds Banking Group or generate 42.22% return on investment over 90 days.

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

Banco Macro SA  vs.  Lloyds Banking Group

Banco Macro SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Macro SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lloyds Banking Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lloyds Banking Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Lloyds Banking reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Macro and Lloyds Banking

The main advantage of trading using opposite Banco Macro and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Macro 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.

The idea behind Banco Macro SA and Lloyds Banking Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.