Correlation Between Lundin Energy and Yara International
Can any of the company-specific risk be diversified away by investing in both Lundin Energy and Yara 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 Energy and Yara International 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 Yara International ASA, you can compare the effects of market volatilities on Lundin Energy and Yara 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 Energy with a short position of Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and Yara International.
Diversification Opportunities for Lundin Energy and Yara International
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lundin and Yara is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA 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 Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of Lundin Energy i.e., Lundin Energy and Yara International go up and down completely randomly.
Pair Corralation between Lundin Energy and Yara International
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the Yara International. In addition to that, Lundin Energy is 2.17 times more volatile than Yara International ASA. It trades about -0.03 of its total potential returns per unit of risk. Yara International ASA is currently generating about -0.01 per unit of volatility. If you would invest 2,622 in Yara International ASA on August 31, 2024 and sell it today you would lose (342.00) from holding Yara International ASA or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. Yara International ASA
Performance |
| Timeline |
| Lundin Energy AB |
| Yara International ASA |
Lundin Energy and Yara International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and Yara International
The main advantage of trading using opposite Lundin Energy and Yara International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy position performs unexpectedly, Yara 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 Yara International will offset losses from the drop in Yara International's 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 |
| Yara International vs. SBA Communications Corp | Yara International vs. Hollywood Bowl Group | Yara International vs. Live Nation Entertainment | Yara International vs. LG Display 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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