Correlation Between Lundin Mining and Supermarket Income
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Supermarket Income 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 Supermarket Income 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 Supermarket Income REIT, you can compare the effects of market volatilities on Lundin Mining and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Supermarket Income.
Diversification Opportunities for Lundin Mining and Supermarket Income
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and Supermarket is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Lundin Mining i.e., Lundin Mining and Supermarket Income go up and down completely randomly.
Pair Corralation between Lundin Mining and Supermarket Income
Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 1.65 times more return on investment than Supermarket Income. However, Lundin Mining is 1.65 times more volatile than Supermarket Income REIT. It trades about 0.04 of its potential returns per unit of risk. Supermarket Income REIT is currently generating about -0.02 per unit of risk. If you would invest 6,437 in Lundin Mining Corp on November 5, 2024 and sell it today you would earn a total of 2,466 from holding Lundin Mining Corp or generate 38.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lundin Mining Corp vs. Supermarket Income REIT
Performance |
| Timeline |
| Lundin Mining Corp |
| Supermarket Income REIT |
Lundin Mining and Supermarket Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Supermarket Income
The main advantage of trading using opposite Lundin Mining and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income's long position.| Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Toyota Motor Corp | Lundin Mining vs. Reliance Industries Ltd |
| Supermarket Income vs. Derwent London PLC | Supermarket Income vs. Hammerson PLC | Supermarket Income vs. Workspace Group PLC | Supermarket Income vs. Abrdn PLC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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