Correlation Between Lloyds Banking and JBS ON

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

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

Diversification Opportunities for Lloyds Banking and JBS ON

-0.26

Correlation Coefficient

Lloyds Banking  JBS ON

Very good diversification

The 3 months correlation between Lloyds and JBS is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and JBS ON NM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS ON NM and Lloyds Banking 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 Banking Group are associated (or correlated) with JBS ON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS ON NM has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and JBS ON go up and down completely randomly.

Pair Corralation between Lloyds Banking and JBS ON

Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 1.7 times more return on investment than JBS ON. However, Lloyds Banking is 1.7 times more volatile than JBS ON NM. It trades about 0.06 of its potential returns per unit of risk. JBS ON NM is currently generating about -0.34 per unit of risk. If you would invest  1,691  in Lloyds Banking Group on October 22, 2024 and sell it today you would earn a total of  35.00  from holding Lloyds Banking Group or generate 2.07% return on investment over 90 days.

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

Lloyds Banking Group  vs.  JBS ON NM

Lloyds Banking Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lloyds Banking Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lloyds Banking is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JBS ON NM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JBS ON NM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JBS ON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lloyds Banking and JBS ON

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

The idea behind Lloyds Banking Group and JBS ON NM 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.