Correlation Between Lloyds Banking and Eclectic Bar

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

Diversification Opportunities for Lloyds Banking and Eclectic Bar

-0.29

Correlation Coefficient

Lloyds Banking  Eclectic Bar

Very good diversification

The 3 months correlation between Lloyds and Eclectic is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Eclectic Bar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclectic Bar Group 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 Eclectic Bar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclectic Bar Group has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Eclectic Bar go up and down completely randomly.

Pair Corralation between Lloyds Banking and Eclectic Bar

Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 7.41 times more return on investment than Eclectic Bar. However, Lloyds Banking is 7.41 times more volatile than Eclectic Bar Group. It trades about 0.18 of its potential returns per unit of risk. Eclectic Bar Group is currently generating about 0.3 per unit of risk. If you would invest  5,324  in Lloyds Banking Group on October 10, 2024 and sell it today you would earn a total of  210.00  from holding Lloyds Banking Group or generate 3.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Lloyds Banking Group  vs.  Eclectic Bar Group

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. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Eclectic Bar Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eclectic Bar Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eclectic Bar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lloyds Banking and Eclectic Bar

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

The idea behind Lloyds Banking Group and Eclectic Bar Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.