Correlation Between Lundin Mining and National Beverage

Can any of the company-specific risk be diversified away by investing in both Lundin Mining and National Beverage 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 National Beverage 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 National Beverage Corp, you can compare the effects of market volatilities on Lundin Mining and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and National Beverage.

Diversification Opportunities for Lundin Mining and National Beverage

0.2

Correlation Coefficient

Lundin Mining  National Beverage

Modest diversification

The 3 months correlation between Lundin and National is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Lundin Mining i.e., Lundin Mining and National Beverage go up and down completely randomly.

Pair Corralation between Lundin Mining and National Beverage

Assuming the 90 days trading horizon Lundin Mining Corp is expected to under-perform the National Beverage. In addition to that, Lundin Mining is 1.18 times more volatile than National Beverage Corp. It trades about -0.07 of its total potential returns per unit of risk. National Beverage Corp is currently generating about -0.05 per unit of volatility. If you would invest  4,510  in National Beverage Corp on October 1, 2024 and sell it today you would lose (212.00) from holding National Beverage Corp or give up 4.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Lundin Mining Corp  vs.  National Beverage Corp

Lundin Mining Corp

Risk-Adjusted Performance

0 of 100

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 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.

National Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Beverage 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.

Pair Trading with Lundin Mining and National Beverage

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

The idea behind Lundin Mining Corp and National Beverage 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.