Correlation Between Huntington Bancshares and Lloyds Banking

Can any of the company-specific risk be diversified away by investing in both Huntington Bancshares 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 Huntington Bancshares and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Huntington Bancshares Incorporated and Lloyds Banking Group, you can compare the effects of market volatilities on Huntington Bancshares 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 Huntington Bancshares with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Bancshares and Lloyds Banking.

Diversification Opportunities for Huntington Bancshares and Lloyds Banking

0.84

Correlation Coefficient

Huntington Bancshares  Lloyds Banking

Very poor diversification

The 3 months correlation between Huntington and Lloyds is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor 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 Huntington Bancshares 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 Huntington Bancshares Incorporated 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 Huntington Bancshares i.e., Huntington Bancshares and Lloyds Banking go up and down completely randomly.

Pair Corralation between Huntington Bancshares and Lloyds Banking

Given the investment horizon of 90 days Huntington Bancshares Incorporated is expected to generate 0.44 times more return on investment than Lloyds Banking. However, Huntington Bancshares Incorporated is 2.29 times less risky than Lloyds Banking. It trades about -0.06 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about -0.1 per unit of risk. If you would invest  1,373  in Huntington Bancshares Incorporated on February 1, 2024 and sell it today you would lose (26.00) from holding Huntington Bancshares Incorporated or give up 1.89% of portfolio value over 90 days.

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

Huntington Bancshares Incorpor  vs.  Lloyds Banking Group

Huntington Bancshares

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Bancshares Incorporated are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Huntington Bancshares may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Lloyds Banking Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lloyds Banking Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Lloyds Banking reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huntington Bancshares and Lloyds Banking

The main advantage of trading using opposite Huntington Bancshares and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares 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.

The idea behind Huntington Bancshares Incorporated and Lloyds Banking 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..