Correlation Between International Biotechnology and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both International Biotechnology 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 International Biotechnology and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Biotechnology Trust and Lundin Mining Corp, you can compare the effects of market volatilities on International Biotechnology 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 International Biotechnology with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Biotechnology and Lundin Mining.
Diversification Opportunities for International Biotechnology and Lundin Mining
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Lundin is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding International Biotechnology Tr 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 International Biotechnology 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 International Biotechnology Trust 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 International Biotechnology i.e., International Biotechnology and Lundin Mining go up and down completely randomly.
Pair Corralation between International Biotechnology and Lundin Mining
Assuming the 90 days trading horizon International Biotechnology Trust is expected to generate 0.47 times more return on investment than Lundin Mining. However, International Biotechnology Trust is 2.14 times less risky than Lundin Mining. It trades about 0.25 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about -0.15 per unit of risk. If you would invest 69,000 in International Biotechnology Trust on November 4, 2024 and sell it today you would earn a total of 3,600 from holding International Biotechnology Trust or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Biotechnology Tr vs. Lundin Mining Corp
Performance |
| Timeline |
| International Biotechnology |
| Lundin Mining Corp |
International Biotechnology and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Biotechnology and Lundin Mining
The main advantage of trading using opposite International Biotechnology and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Biotechnology 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.| International Biotechnology vs. First Class Metals | International Biotechnology vs. Odfjell Drilling | International Biotechnology vs. GoldMining | International Biotechnology vs. Molson Coors Beverage |
| Lundin Mining vs. Bankers Investment Trust | Lundin Mining vs. Metro Bank PLC | Lundin Mining vs. Southwest Airlines Co | Lundin Mining vs. McEwen 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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