Correlation Between Lundin Mining and Nutrien
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Nutrien 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 Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and Nutrien, you can compare the effects of market volatilities on Lundin Mining and Nutrien 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 Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Nutrien.
Diversification Opportunities for Lundin Mining and Nutrien
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and Nutrien is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien 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 Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Lundin Mining i.e., Lundin Mining and Nutrien go up and down completely randomly.
Pair Corralation between Lundin Mining and Nutrien
Assuming the 90 days trading horizon Lundin Mining is expected to generate 1.41 times more return on investment than Nutrien. However, Lundin Mining is 1.41 times more volatile than Nutrien. It trades about 0.04 of its potential returns per unit of risk. Nutrien is currently generating about -0.03 per unit of risk. If you would invest 1,354 in Lundin Mining on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Lundin Mining or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lundin Mining vs. Nutrien
Performance |
| Timeline |
| Lundin Mining |
| Nutrien |
Lundin Mining and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Nutrien
The main advantage of trading using opposite Lundin Mining and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Nutrien 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 Nutrien will offset losses from the drop in Nutrien's long position.| Lundin Mining vs. HudBay Minerals | Lundin Mining vs. First Quantum Minerals | Lundin Mining vs. Ivanhoe Mines | Lundin Mining vs. Capstone Mining Corp |
| Nutrien vs. CVW CleanTech | Nutrien vs. Chemtrade Logistics Income | Nutrien vs. Bip Investment Corp | Nutrien vs. 2028 Investment Grade |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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