Correlation Between International Petroleum and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both International Petroleum 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 Petroleum 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 Petroleum and Lundin Mining, you can compare the effects of market volatilities on International Petroleum 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 Petroleum with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Petroleum and Lundin Mining.
Diversification Opportunities for International Petroleum and Lundin Mining
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Lundin is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding International Petroleum and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and International Petroleum 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 Petroleum 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 has no effect on the direction of International Petroleum i.e., International Petroleum and Lundin Mining go up and down completely randomly.
Pair Corralation between International Petroleum and Lundin Mining
Assuming the 90 days trading horizon International Petroleum is expected to generate 0.74 times more return on investment than Lundin Mining. However, International Petroleum is 1.35 times less risky than Lundin Mining. It trades about 0.25 of its potential returns per unit of risk. Lundin Mining is currently generating about -0.22 per unit of risk. If you would invest 13,590 in International Petroleum on November 5, 2024 and sell it today you would earn a total of 1,090 from holding International Petroleum or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Petroleum vs. Lundin Mining
Performance |
| Timeline |
| International Petroleum |
| Lundin Mining |
International Petroleum and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Petroleum and Lundin Mining
The main advantage of trading using opposite International Petroleum and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Petroleum 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 Petroleum vs. Africa Oil Corp | International Petroleum vs. International Petroleum Corp | International Petroleum vs. Lundin Mining |
| Lundin Mining vs. Boliden AB | Lundin Mining vs. Lundin Gold | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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