Correlation Between Nordic Iron and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Nordic Iron 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 Nordic Iron and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Iron Ore and Lundin Mining, you can compare the effects of market volatilities on Nordic Iron 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 Nordic Iron with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and Lundin Mining.
Diversification Opportunities for Nordic Iron and Lundin Mining
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nordic and Lundin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Nordic Iron 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 Nordic Iron Ore 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 has no effect on the direction of Nordic Iron i.e., Nordic Iron and Lundin Mining go up and down completely randomly.
Pair Corralation between Nordic Iron and Lundin Mining
Assuming the 90 days trading horizon Nordic Iron Ore is expected to generate 1.4 times more return on investment than Lundin Mining. However, Nordic Iron is 1.4 times more volatile than Lundin Mining. It trades about 0.02 of its potential returns per unit of risk. Lundin Mining is currently generating about -0.04 per unit of risk. If you would invest 498.00 in Nordic Iron Ore on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Nordic Iron Ore or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Iron Ore vs. Lundin Mining
Performance |
| Timeline |
| Nordic Iron Ore |
| Lundin Mining |
Nordic Iron and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Iron and Lundin Mining
The main advantage of trading using opposite Nordic Iron and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Iron 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.| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding | Nordic Iron vs. KABE Group AB |
| Lundin Mining vs. Boliden AB | Lundin Mining vs. Lundin Gold | Lundin Mining vs. SSAB AB | Lundin Mining vs. AB SKF |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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