Correlation Between Lloyds Banking and JAPAN POST

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

Diversification Opportunities for Lloyds Banking and JAPAN POST

-0.37

Correlation Coefficient

Lloyds Banking  JAPAN POST

Very good diversification

The 3 months correlation between Lloyds and JAPAN is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and JAPAN POST BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN POST BANK 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 JAPAN POST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN POST BANK has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and JAPAN POST go up and down completely randomly.

Pair Corralation between Lloyds Banking and JAPAN POST

Assuming the 90 days horizon Lloyds Banking Group is expected to under-perform the JAPAN POST. In addition to that, Lloyds Banking is 1.51 times more volatile than JAPAN POST BANK. It trades about -0.03 of its total potential returns per unit of risk. JAPAN POST BANK is currently generating about 0.02 per unit of volatility. If you would invest  909.00  in JAPAN POST BANK on October 1, 2024 and sell it today you would earn a total of  11.00  from holding JAPAN POST BANK or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Lloyds Banking Group  vs.  JAPAN POST BANK

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.

JAPAN POST BANK

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN POST BANK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, JAPAN POST is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lloyds Banking and JAPAN POST

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

The idea behind Lloyds Banking Group and JAPAN POST BANK 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 .