Correlation Between Lundin Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Lundin Energy and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and Dow Jones.
Diversification Opportunities for Lundin Energy and Dow Jones
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lundin and Dow is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lundin Energy i.e., Lundin Energy and Dow Jones go up and down completely randomly.
Pair Corralation between Lundin Energy and Dow Jones
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the Dow Jones. In addition to that, Lundin Energy is 4.89 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,351,765 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,139,300 from holding Dow Jones Industrial or generate 33.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.35% |
| Values | Daily Returns |
Lundin Energy AB vs. Dow Jones Industrial
Performance |
| Timeline |
Lundin Energy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lundin Energy AB
Pair trading matchups for Lundin Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lundin Energy and Dow Jones
The main advantage of trading using opposite Lundin Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Lundin Energy vs. GRUPO CARSO A1 | Lundin Energy vs. TOREX SEMICONDUCTOR LTD | Lundin Energy vs. MagnaChip Semiconductor Corp | Lundin Energy vs. INTER CARS SA |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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