Correlation Between Lundin Mining and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks Plc, you can compare the effects of market volatilities on Lundin Mining and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Fevertree Drinks.
Diversification Opportunities for Lundin Mining and Fevertree Drinks
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and Fevertree is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Lundin Mining i.e., Lundin Mining and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Lundin Mining and Fevertree Drinks
Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 1.61 times more return on investment than Fevertree Drinks. However, Lundin Mining is 1.61 times more volatile than Fevertree Drinks Plc. It trades about -0.06 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.18 per unit of risk. If you would invest 10,928 in Lundin Mining Corp on October 12, 2024 and sell it today you would lose (1,093) from holding Lundin Mining Corp or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining Corp vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Lundin Mining Corp |
| Fevertree Drinks Plc |
Lundin Mining and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Fevertree Drinks
The main advantage of trading using opposite Lundin Mining and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Lundin Mining vs. Walmart | Lundin Mining vs. BYD Co | Lundin Mining vs. Volkswagen AG | Lundin Mining vs. Volkswagen AG Non Vtg |
| Fevertree Drinks vs. UNIQA Insurance Group | Fevertree Drinks vs. Solstad Offshore ASA | Fevertree Drinks vs. Mobile Tornado Group | Fevertree Drinks vs. Lundin Mining Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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