Correlation Between Teck Resources and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Teck Resources 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 Teck Resources and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teck Resources Limited and Lundin Mining, you can compare the effects of market volatilities on Teck Resources 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 Teck Resources with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teck Resources and Lundin Mining.
Diversification Opportunities for Teck Resources and Lundin Mining
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teck and Lundin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Teck Resources Limited and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Teck Resources 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 Teck Resources Limited 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 Teck Resources i.e., Teck Resources and Lundin Mining go up and down completely randomly.
Pair Corralation between Teck Resources and Lundin Mining
Assuming the 90 days trading horizon Teck Resources is expected to generate 1.72 times less return on investment than Lundin Mining. But when comparing it to its historical volatility, Teck Resources Limited is 1.26 times less risky than Lundin Mining. It trades about 0.06 of its potential returns per unit of risk. Lundin Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 843.00 in Lundin Mining on August 25, 2024 and sell it today you would earn a total of 571.00 from holding Lundin Mining or generate 67.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teck Resources Limited vs. Lundin Mining
Performance |
| Timeline |
| Teck Resources |
| Lundin Mining |
Teck Resources and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teck Resources and Lundin Mining
The main advantage of trading using opposite Teck Resources and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teck Resources 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.| Teck Resources vs. First Majestic Silver | Teck Resources vs. Ivanhoe Energy | Teck Resources vs. Orezone Gold Corp | Teck Resources vs. Faraday Copper Corp |
| Lundin Mining vs. HudBay Minerals | Lundin Mining vs. First Quantum Minerals | Lundin Mining vs. Ivanhoe Mines | Lundin Mining vs. Capstone Mining Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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