Correlation Between Lundin Mining and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and TechnipFMC PLC 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 Lundin Mining and TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining Corp and TechnipFMC PLC, you can compare the effects of market volatilities on Lundin Mining and TechnipFMC PLC 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 Lundin Mining with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and TechnipFMC PLC.
Diversification Opportunities for Lundin Mining and TechnipFMC PLC
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lundin and TechnipFMC is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and Lundin Mining 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 Lundin Mining Corp are associated (or correlated) with TechnipFMC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC PLC has no effect on the direction of Lundin Mining i.e., Lundin Mining and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between Lundin Mining and TechnipFMC PLC
Assuming the 90 days trading horizon Lundin Mining is expected to generate 21.67 times less return on investment than TechnipFMC PLC. In addition to that, Lundin Mining is 1.02 times more volatile than TechnipFMC PLC. It trades about 0.01 of its total potential returns per unit of risk. TechnipFMC PLC is currently generating about 0.13 per unit of volatility. If you would invest 2,952 in TechnipFMC PLC on October 14, 2024 and sell it today you would earn a total of 162.00 from holding TechnipFMC PLC or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining Corp vs. TechnipFMC PLC
Performance |
| Timeline |
| Lundin Mining Corp |
| TechnipFMC PLC |
Lundin Mining and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and TechnipFMC PLC
The main advantage of trading using opposite Lundin Mining and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, TechnipFMC PLC 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 TechnipFMC PLC will offset losses from the drop in TechnipFMC PLC's long position.| Lundin Mining vs. Made Tech Group | Lundin Mining vs. First Majestic Silver | Lundin Mining vs. Micron Technology | Lundin Mining vs. Fortuna Silver Mines |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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