Correlation Between New Oriental and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both New Oriental 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 New Oriental and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Lloyds Banking Group, you can compare the effects of market volatilities on New Oriental 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 New Oriental with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Lloyds Banking.
Diversification Opportunities for New Oriental and Lloyds Banking
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and Lloyds is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education 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 New Oriental 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 New Oriental Education 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 New Oriental i.e., New Oriental and Lloyds Banking go up and down completely randomly.
Pair Corralation between New Oriental and Lloyds Banking
Assuming the 90 days trading horizon New Oriental Education is expected to generate 1.34 times more return on investment than Lloyds Banking. However, New Oriental is 1.34 times more volatile than Lloyds Banking Group. It trades about 0.06 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.05 per unit of risk. If you would invest 1,255 in New Oriental Education on September 23, 2024 and sell it today you would earn a total of 1,237 from holding New Oriental Education or generate 98.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
New Oriental Education vs. Lloyds Banking Group
Performance |
Timeline |
New Oriental Education |
Lloyds Banking Group |
New Oriental and Lloyds Banking Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Oriental and Lloyds Banking
The main advantage of trading using opposite New Oriental and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental 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.New Oriental vs. TAL Education Group | New Oriental vs. Cogna Educao SA | New Oriental vs. Yduqs Participaes SA | New Oriental vs. GAEC Educacao SA |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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