Correlation Between Lloyds Banking and Citizens Bancorp

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

Diversification Opportunities for Lloyds Banking and Citizens Bancorp

-0.1

Correlation Coefficient

Lloyds Banking  Citizens Bancorp

Good diversification

The 3 months correlation between Lloyds and Citizens is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv 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 Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Citizens Bancorp go up and down completely randomly.

Pair Corralation between Lloyds Banking and Citizens Bancorp

Assuming the 90 days horizon Lloyds Banking Group is expected to generate 2.34 times more return on investment than Citizens Bancorp. However, Lloyds Banking is 2.34 times more volatile than Citizens Bancorp Investment. It trades about 0.05 of its potential returns per unit of risk. Citizens Bancorp Investment is currently generating about -0.04 per unit of risk. If you would invest  55.00  in Lloyds Banking Group on September 25, 2024 and sell it today you would earn a total of  13.00  from holding Lloyds Banking Group or generate 23.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.62%
Values	Daily Returns

Lloyds Banking Group  vs.  Citizens Bancorp Investment

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Citizens Bancorp Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citizens Bancorp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lloyds Banking and Citizens Bancorp

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

The idea behind Lloyds Banking Group and Citizens Bancorp Investment 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.