Correlation Between Lloyds Banking and Take Two

Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Take Two 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 Take Two 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 Take Two Interactive Software, you can compare the effects of market volatilities on Lloyds Banking and Take Two 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 Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Take Two.

Diversification Opportunities for Lloyds Banking and Take Two

0.54

Correlation Coefficient

Lloyds Banking  Take Two

Very weak diversification

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

Pair Corralation between Lloyds Banking and Take Two

Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 0.75 times more return on investment than Take Two. However, Lloyds Banking Group is 1.33 times less risky than Take Two. It trades about 0.22 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.06 per unit of risk. If you would invest  1,638  in Lloyds Banking Group on December 2, 2024 and sell it today you would earn a total of  586.00  from holding Lloyds Banking Group or generate 35.78% return on investment over 90 days.

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

Lloyds Banking Group  vs.  Take Two Interactive Software

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 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Lloyds Banking sustained solid returns over the last few months and may actually be approaching a breakup point.

Take Two Interactive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Take Two may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lloyds Banking and Take Two

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

The idea behind Lloyds Banking Group and Take Two Interactive Software 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .