Correlation Between Lundin Mining and MT Bank

Can any of the company-specific risk be diversified away by investing in both Lundin Mining and MT Bank 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 Mining and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lundin Mining Corp and MT Bank Corp, you can compare the effects of market volatilities on Lundin Mining and MT Bank 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 Mining with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and MT Bank.

Diversification Opportunities for Lundin Mining and MT Bank

0.21

Correlation Coefficient

Lundin Mining  MT Bank

Modest diversification

The 3 months correlation between Lundin and 0JW2 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and Lundin Mining 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 Mining Corp are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Lundin Mining i.e., Lundin Mining and MT Bank go up and down completely randomly.

Pair Corralation between Lundin Mining and MT Bank

Assuming the 90 days trading horizon Lundin Mining Corp is expected to under-perform the MT Bank. In addition to that, Lundin Mining is 1.95 times more volatile than MT Bank Corp. It trades about -0.04 of its total potential returns per unit of risk. MT Bank Corp is currently generating about -0.07 per unit of volatility. If you would invest  18,765  in MT Bank Corp on December 30, 2024 and sell it today you would lose (1,244) from holding MT Bank Corp or give up 6.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.31%
Values	Daily Returns

Lundin Mining Corp  vs.  MT Bank Corp

Lundin Mining Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lundin Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

MT Bank Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days MT Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Lundin Mining and MT Bank

The main advantage of trading using opposite Lundin Mining and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.

The idea behind Lundin Mining Corp and MT Bank Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..