Correlation Between McKesson and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both McKesson and Lloyds Banking 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 McKesson and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McKesson and Lloyds Banking Group, you can compare the effects of market volatilities on McKesson and Lloyds Banking 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 McKesson with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of McKesson and Lloyds Banking.
Diversification Opportunities for McKesson and Lloyds Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between McKesson and Lloyds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding McKesson and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group and McKesson 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 McKesson are associated (or correlated) with Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of McKesson i.e., McKesson and Lloyds Banking go up and down completely randomly.
Pair Corralation between McKesson and Lloyds Banking
If you would invest 1,010,057 in McKesson on October 20, 2024 and sell it today you would earn a total of 189,511 from holding McKesson or generate 18.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
McKesson vs. Lloyds Banking Group
Performance |
Timeline |
McKesson |
Lloyds Banking Group |
McKesson and Lloyds Banking Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McKesson and Lloyds Banking
The main advantage of trading using opposite McKesson and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McKesson position performs unexpectedly, Lloyds Banking 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 Lloyds Banking will offset losses from the drop in Lloyds Banking's long position.McKesson vs. Tesla Inc | ||
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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