Correlation Between Lundin Energy and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and US Bancorp 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 US Bancorp 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 US Bancorp, you can compare the effects of market volatilities on Lundin Energy and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and US Bancorp.
Diversification Opportunities for Lundin Energy and US Bancorp
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lundin and UB5 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Lundin Energy i.e., Lundin Energy and US Bancorp go up and down completely randomly.
Pair Corralation between Lundin Energy and US Bancorp
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the US Bancorp. In addition to that, Lundin Energy is 1.59 times more volatile than US Bancorp. It trades about -0.04 of its total potential returns per unit of risk. US Bancorp is currently generating about 0.02 per unit of volatility. If you would invest 4,015 in US Bancorp on November 19, 2024 and sell it today you would earn a total of 494.00 from holding US Bancorp or generate 12.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. US Bancorp
Performance |
| Timeline |
| Lundin Energy AB |
| US Bancorp |
Lundin Energy and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and US Bancorp
The main advantage of trading using opposite Lundin Energy and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Lundin Energy vs. CORNISH METALS INC | Lundin Energy vs. Western Copper and | Lundin Energy vs. Perseus Mining Limited | Lundin Energy vs. CanSino Biologics |
| US Bancorp vs. Sims Metal Management | US Bancorp vs. COLUMBIA SPORTSWEAR | US Bancorp vs. JAPAN TOBACCO UNSPADR12 | US Bancorp vs. Jupiter Fund Management |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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