Correlation Between Lundin Energy and RTL Group
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and RTL Group 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 RTL Group 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 RTL Group SA, you can compare the effects of market volatilities on Lundin Energy and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and RTL Group.
Diversification Opportunities for Lundin Energy and RTL Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lundin and RTL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Lundin Energy i.e., Lundin Energy and RTL Group go up and down completely randomly.
Pair Corralation between Lundin Energy and RTL Group
Assuming the 90 days horizon Lundin Energy AB is expected to generate 2.19 times more return on investment than RTL Group. However, Lundin Energy is 2.19 times more volatile than RTL Group SA. It trades about 0.01 of its potential returns per unit of risk. RTL Group SA is currently generating about -0.05 per unit of risk. If you would invest 63.00 in Lundin Energy AB on September 2, 2024 and sell it today you would lose (4.00) from holding Lundin Energy AB or give up 6.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. RTL Group SA
Performance |
| Timeline |
| Lundin Energy AB |
| RTL Group SA |
Lundin Energy and RTL Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and RTL Group
The main advantage of trading using opposite Lundin Energy and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group's long position.| Lundin Energy vs. Iridium Communications | Lundin Energy vs. Spirent Communications plc | Lundin Energy vs. MTI WIRELESS EDGE | Lundin Energy vs. Salesforce |
| RTL Group vs. MTI WIRELESS EDGE | RTL Group vs. Infrastrutture Wireless Italiane | RTL Group vs. Marie Brizard Wine | RTL Group vs. GAMING FAC SA |
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.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |