Correlation Between Lundin Energy and BankUnited
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and BankUnited 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 BankUnited 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 BankUnited, you can compare the effects of market volatilities on Lundin Energy and BankUnited 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 BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and BankUnited.
Diversification Opportunities for Lundin Energy and BankUnited
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lundin and BankUnited is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Lundin Energy i.e., Lundin Energy and BankUnited go up and down completely randomly.
Pair Corralation between Lundin Energy and BankUnited
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the BankUnited. In addition to that, Lundin Energy is 1.32 times more volatile than BankUnited. It trades about -0.05 of its total potential returns per unit of risk. BankUnited is currently generating about 0.04 per unit of volatility. If you would invest 3,003 in BankUnited on August 30, 2024 and sell it today you would earn a total of 1,117 from holding BankUnited or generate 37.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lundin Energy AB vs. BankUnited
Performance |
| Timeline |
| Lundin Energy AB |
| BankUnited |
Lundin Energy and BankUnited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and BankUnited
The main advantage of trading using opposite Lundin Energy and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited's long position.| Lundin Energy vs. SBA Communications Corp | Lundin Energy vs. STRAYER EDUCATION | Lundin Energy vs. Perdoceo Education | Lundin Energy vs. Consolidated Communications Holdings |
| BankUnited vs. Fifth Third Bancorp | BankUnited vs. Huntington Bancshares Incorporated | BankUnited vs. Superior Plus Corp | BankUnited vs. NMI Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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