Correlation Between Metals Exploration and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Metals Exploration and Lundin Mining 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 Metals Exploration and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals Exploration Plc and Lundin Mining Corp, you can compare the effects of market volatilities on Metals Exploration and Lundin Mining 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 Metals Exploration with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and Lundin Mining.
Diversification Opportunities for Metals Exploration and Lundin Mining
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Metals and Lundin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp and Metals Exploration 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 Metals Exploration Plc are associated (or correlated) with Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Metals Exploration i.e., Metals Exploration and Lundin Mining go up and down completely randomly.
Pair Corralation between Metals Exploration and Lundin Mining
Assuming the 90 days trading horizon Metals Exploration Plc is expected to under-perform the Lundin Mining. In addition to that, Metals Exploration is 1.99 times more volatile than Lundin Mining Corp. It trades about -0.12 of its total potential returns per unit of risk. Lundin Mining Corp is currently generating about -0.15 per unit of volatility. If you would invest 9,550 in Lundin Mining Corp on November 4, 2024 and sell it today you would lose (647.00) from holding Lundin Mining Corp or give up 6.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals Exploration Plc vs. Lundin Mining Corp
Performance |
| Timeline |
| Metals Exploration Plc |
| Lundin Mining Corp |
Metals Exploration and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals Exploration and Lundin Mining
The main advantage of trading using opposite Metals Exploration and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| Metals Exploration vs. Fortune Brands Home | Metals Exploration vs. Applied Materials | Metals Exploration vs. Gaming Realms plc | Metals Exploration vs. Synthomer plc |
| Lundin Mining vs. Bankers Investment Trust | Lundin Mining vs. Metro Bank PLC | Lundin Mining vs. Southwest Airlines Co | Lundin Mining vs. McEwen Mining |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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