Correlation Between Lundin Mining and Lundin Gold
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Lundin Gold 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 Mining and Lundin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and Lundin Gold, you can compare the effects of market volatilities on Lundin Mining and Lundin Gold 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 Mining with a short position of Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Lundin Gold.
Diversification Opportunities for Lundin Mining and Lundin Gold
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and Lundin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and Lundin Mining 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 Mining are associated (or correlated) with Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of Lundin Mining i.e., Lundin Mining and Lundin Gold go up and down completely randomly.
Pair Corralation between Lundin Mining and Lundin Gold
Assuming the 90 days trading horizon Lundin Mining is expected to generate 1.4 times less return on investment than Lundin Gold. In addition to that, Lundin Mining is 1.08 times more volatile than Lundin Gold. It trades about 0.06 of its total potential returns per unit of risk. Lundin Gold is currently generating about 0.09 per unit of volatility. If you would invest 9,862 in Lundin Gold on September 1, 2024 and sell it today you would earn a total of 15,238 from holding Lundin Gold or generate 154.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lundin Mining vs. Lundin Gold
Performance |
| Timeline |
| Lundin Mining |
| Lundin Gold |
Lundin Mining and Lundin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Lundin Gold
The main advantage of trading using opposite Lundin Mining and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Lundin Gold 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 Gold will offset losses from the drop in Lundin Gold's long position.| Lundin Mining vs. Boliden AB | Lundin Mining vs. Lundin Gold | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF |
| Lundin Gold vs. Lundin Mining | Lundin Gold vs. Africa Oil Corp | Lundin Gold vs. International Petroleum | Lundin Gold vs. Boliden AB |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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