Correlation Between Lundin Energy and 4Front Ventures
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and 4Front Ventures 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 Energy and 4Front Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Energy AB and 4Front Ventures Corp, you can compare the effects of market volatilities on Lundin Energy and 4Front Ventures 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 Energy with a short position of 4Front Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and 4Front Ventures.
Diversification Opportunities for Lundin Energy and 4Front Ventures
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and 4Front is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and 4Front Ventures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4Front Ventures Corp and Lundin Energy 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 Energy AB are associated (or correlated) with 4Front Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4Front Ventures Corp has no effect on the direction of Lundin Energy i.e., Lundin Energy and 4Front Ventures go up and down completely randomly.
Pair Corralation between Lundin Energy and 4Front Ventures
Assuming the 90 days horizon Lundin Energy AB is expected to generate 0.21 times more return on investment than 4Front Ventures. However, Lundin Energy AB is 4.73 times less risky than 4Front Ventures. It trades about -0.07 of its potential returns per unit of risk. 4Front Ventures Corp is currently generating about -0.03 per unit of risk. If you would invest 72.00 in Lundin Energy AB on August 28, 2024 and sell it today you would lose (15.00) from holding Lundin Energy AB or give up 20.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Lundin Energy AB vs. 4Front Ventures Corp
Performance |
| Timeline |
| Lundin Energy AB |
| 4Front Ventures Corp |
Lundin Energy and 4Front Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and 4Front Ventures
The main advantage of trading using opposite Lundin Energy and 4Front Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, 4Front Ventures 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 4Front Ventures will offset losses from the drop in 4Front Ventures' long position.| Lundin Energy vs. Renew Energy Global | Lundin Energy vs. Energy Vault Holdings | Lundin Energy vs. Fluence Energy | Lundin Energy vs. Advent Technologies Holdings |
| 4Front Ventures vs. Goodness Growth Holdings | 4Front Ventures vs. Body and Mind | 4Front Ventures vs. Rubicon Organics | 4Front Ventures vs. CLS Holdings USA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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