Correlation Between Lundin Energy and Industrial
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and Industrial 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 Industrial 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 Industrial and Commercial, you can compare the effects of market volatilities on Lundin Energy and Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and Industrial.
Diversification Opportunities for Lundin Energy and Industrial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lundin and Industrial is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Lundin Energy i.e., Lundin Energy and Industrial go up and down completely randomly.
Pair Corralation between Lundin Energy and Industrial
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the Industrial. In addition to that, Lundin Energy is 2.59 times more volatile than Industrial and Commercial. It trades about -0.25 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.12 per unit of volatility. If you would invest 59.00 in Industrial and Commercial on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Industrial and Commercial or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. Industrial and Commercial
Performance |
| Timeline |
| Lundin Energy AB |
| Industrial and Commercial |
Lundin Energy and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and Industrial
The main advantage of trading using opposite Lundin Energy and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.| Lundin Energy vs. Atlantica Sustainable Infrastructure | Lundin Energy vs. Clearway Energy | Lundin Energy vs. Brookfield Renewable Corp | Lundin Energy vs. Nextera Energy Partners |
| Industrial vs. ANZ Group Holdings | Industrial vs. National Australia Bank | Industrial vs. Agricultural Bank | Industrial vs. Bank of America |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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