Correlation Between Societe Generale and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Societe Generale 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 Societe Generale and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Societe Generale ADR and Lloyds Banking Group, you can compare the effects of market volatilities on Societe Generale 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 Societe Generale with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe Generale and Lloyds Banking.
Diversification Opportunities for Societe Generale and Lloyds Banking
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Societe and Lloyds is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Societe Generale ADR 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 Societe Generale 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 Societe Generale ADR 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 Societe Generale i.e., Societe Generale and Lloyds Banking go up and down completely randomly.
Pair Corralation between Societe Generale and Lloyds Banking
Assuming the 90 days horizon Societe Generale ADR is expected to generate 1.15 times more return on investment than Lloyds Banking. However, Societe Generale is 1.15 times more volatile than Lloyds Banking Group. It trades about 0.37 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.3 per unit of risk. If you would invest 521.00 in Societe Generale ADR on December 4, 2024 and sell it today you would earn a total of 308.00 from holding Societe Generale ADR or generate 59.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Societe Generale ADR vs. Lloyds Banking Group
Performance |
Timeline |
Societe Generale ADR |
Lloyds Banking Group |
Societe Generale and Lloyds Banking Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Societe Generale and Lloyds Banking
The main advantage of trading using opposite Societe Generale and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe Generale 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.Societe Generale vs. BNP Paribas SA | Societe Generale vs. Credit Agricole SA | Societe Generale vs. Intesa Sanpaolo SpA | Societe Generale vs. Commerzbank AG PK |
Lloyds Banking vs. Itau Unibanco Banco | Lloyds Banking vs. Grupo Financiero Galicia | Lloyds Banking vs. Banco Macro SA | Lloyds Banking vs. Banco Santander Brasil |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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