Correlation Between Union Bank and LLOYDS METALS

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

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

Diversification Opportunities for Union Bank and LLOYDS METALS

0.24

Correlation Coefficient

Union Bank  LLOYDS METALS

Modest diversification

The 3 months correlation between Union and LLOYDS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of 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 Union Bank 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 Union Bank of 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 Union Bank i.e., Union Bank and LLOYDS METALS go up and down completely randomly.

Pair Corralation between Union Bank and LLOYDS METALS

Assuming the 90 days trading horizon Union Bank is expected to generate 78.29 times less return on investment than LLOYDS METALS. But when comparing it to its historical volatility, Union Bank of is 1.43 times less risky than LLOYDS METALS. It trades about 0.0 of its potential returns per unit of risk. LLOYDS METALS AND is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  84,305  in LLOYDS METALS AND on September 20, 2024 and sell it today you would earn a total of  33,530  from holding LLOYDS METALS AND or generate 39.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Union Bank of  vs.  LLOYDS METALS AND

Union Bank

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Union Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Union Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

LLOYDS METALS AND

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LLOYDS METALS AND are ranked lower than 18 (%) 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 Union Bank and LLOYDS METALS

The main advantage of trading using opposite Union Bank and LLOYDS METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank 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 Union Bank of 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.