Correlation Between Spencers Retail and LLOYDS METALS

Can any of the company-specific risk be diversified away by investing in both Spencers Retail and LLOYDS METALS 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 Spencers Retail and LLOYDS METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spencers Retail Limited and LLOYDS METALS AND, you can compare the effects of market volatilities on Spencers Retail and LLOYDS METALS 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 Spencers Retail with a short position of LLOYDS METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spencers Retail and LLOYDS METALS.

Diversification Opportunities for Spencers Retail and LLOYDS METALS

-0.21

Correlation Coefficient

Spencers Retail  LLOYDS METALS

Very good diversification

The 3 months correlation between Spencers and LLOYDS is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Spencers Retail Limited and LLOYDS METALS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LLOYDS METALS AND and Spencers Retail 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 Spencers Retail Limited are associated (or correlated) with LLOYDS METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LLOYDS METALS AND has no effect on the direction of Spencers Retail i.e., Spencers Retail and LLOYDS METALS go up and down completely randomly.

Pair Corralation between Spencers Retail and LLOYDS METALS

Assuming the 90 days trading horizon Spencers Retail Limited is expected to under-perform the LLOYDS METALS. In addition to that, Spencers Retail is 1.13 times more volatile than LLOYDS METALS AND. It trades about -0.03 of its total potential returns per unit of risk. LLOYDS METALS AND is currently generating about 0.22 per unit of volatility. If you would invest  99,710  in LLOYDS METALS AND on October 24, 2024 and sell it today you would earn a total of  41,705  from holding LLOYDS METALS AND or generate 41.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Spencers Retail Limited  vs.  LLOYDS METALS AND

Spencers Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spencers Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Spencers Retail is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

LLOYDS METALS AND

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, LLOYDS METALS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spencers Retail and LLOYDS METALS

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

The idea behind Spencers Retail Limited and LLOYDS METALS AND 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.