Correlation Between First and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both First and Lundin Mining 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 First and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Class Metals and Lundin Mining Corp, you can compare the effects of market volatilities on First and Lundin Mining 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 First with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of First and Lundin Mining.
Diversification Opportunities for First and Lundin Mining
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Lundin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding First Class Metals and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp and First 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 First Class Metals are associated (or correlated) with Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of First i.e., First and Lundin Mining go up and down completely randomly.
Pair Corralation between First and Lundin Mining
Assuming the 90 days trading horizon First Class Metals is expected to under-perform the Lundin Mining. In addition to that, First is 1.57 times more volatile than Lundin Mining Corp. It trades about -0.33 of its total potential returns per unit of risk. Lundin Mining Corp is currently generating about -0.19 per unit of volatility. If you would invest 10,964 in Lundin Mining Corp on October 9, 2024 and sell it today you would lose (929.00) from holding Lundin Mining Corp or give up 8.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Class Metals vs. Lundin Mining Corp
Performance |
| Timeline |
| First Class Metals |
| Lundin Mining Corp |
First and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First and Lundin Mining
The main advantage of trading using opposite First and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| First vs. Futura Medical | First vs. Edita Food Industries | First vs. Medical Properties Trust | First vs. Bloomsbury Publishing Plc |
| Lundin Mining vs. First Class Metals | Lundin Mining vs. Jacquet Metal Service | Lundin Mining vs. Dentsply Sirona | Lundin Mining vs. Atalaya Mining |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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