Correlation Between Lundin Mining and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Spotify Technology 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 Spotify Technology 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 Spotify Technology SA, you can compare the effects of market volatilities on Lundin Mining and Spotify Technology 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 Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Spotify Technology.
Diversification Opportunities for Lundin Mining and Spotify Technology
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lundin and Spotify is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology 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 Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Lundin Mining i.e., Lundin Mining and Spotify Technology go up and down completely randomly.
Pair Corralation between Lundin Mining and Spotify Technology
Assuming the 90 days trading horizon Lundin Mining Corp is expected to under-perform the Spotify Technology. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Mining Corp is 1.02 times less risky than Spotify Technology. The stock trades about -0.23 of its potential returns per unit of risk. The Spotify Technology SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 46,695 in Spotify Technology SA on January 10, 2025 and sell it today you would earn a total of 3,280 from holding Spotify Technology SA or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining Corp vs. Spotify Technology SA
Performance |
| Timeline |
| Lundin Mining Corp |
| Spotify Technology |
Lundin Mining and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Spotify Technology
The main advantage of trading using opposite Lundin Mining and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology's long position.| Lundin Mining vs. Rightmove PLC | Lundin Mining vs. Bioventix | Lundin Mining vs. VeriSign | Lundin Mining vs. Games Workshop Group |
| Spotify Technology vs. EJF Investments | Spotify Technology vs. Beeks Trading | Spotify Technology vs. Primorus Investments plc | Spotify Technology vs. Orascom Investment Holding |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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