Correlation Between Lundin Mining and Sherritt International
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Sherritt International 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 Sherritt International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and Sherritt International, you can compare the effects of market volatilities on Lundin Mining and Sherritt International 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 Sherritt International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Sherritt International.
Diversification Opportunities for Lundin Mining and Sherritt International
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lundin and Sherritt is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and Sherritt International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherritt International 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 Sherritt International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherritt International has no effect on the direction of Lundin Mining i.e., Lundin Mining and Sherritt International go up and down completely randomly.
Pair Corralation between Lundin Mining and Sherritt International
Assuming the 90 days trading horizon Lundin Mining is expected to generate 0.82 times more return on investment than Sherritt International. However, Lundin Mining is 1.23 times less risky than Sherritt International. It trades about 0.03 of its potential returns per unit of risk. Sherritt International is currently generating about -0.2 per unit of risk. If you would invest 1,417 in Lundin Mining on August 27, 2024 and sell it today you would earn a total of 12.00 from holding Lundin Mining or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining vs. Sherritt International
Performance |
| Timeline |
| Lundin Mining |
| Sherritt International |
Lundin Mining and Sherritt International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Sherritt International
The main advantage of trading using opposite Lundin Mining and Sherritt International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Sherritt International 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 Sherritt International will offset losses from the drop in Sherritt International'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 |
| Sherritt International vs. HudBay Minerals | Sherritt International vs. Lundin Mining | Sherritt International vs. First Quantum Minerals | Sherritt International vs. Ivanhoe Mines |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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