Correlation Between DISTRICT METALS and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both DISTRICT METALS 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 DISTRICT METALS and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DISTRICT METALS and Lundin Mining, you can compare the effects of market volatilities on DISTRICT METALS 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 DISTRICT METALS with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISTRICT METALS and Lundin Mining.
Diversification Opportunities for DISTRICT METALS and Lundin Mining
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DISTRICT and Lundin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS i.e., DISTRICT METALS and Lundin Mining go up and down completely randomly.
Pair Corralation between DISTRICT METALS and Lundin Mining
Assuming the 90 days trading horizon DISTRICT METALS is expected to generate 2.03 times more return on investment than Lundin Mining. However, DISTRICT METALS is 2.03 times more volatile than Lundin Mining. It trades about 0.07 of its potential returns per unit of risk. Lundin Mining is currently generating about -0.05 per unit of risk. If you would invest 21.00 in DISTRICT METALS on September 24, 2024 and sell it today you would earn a total of 3.00 from holding DISTRICT METALS or generate 14.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
DISTRICT METALS vs. Lundin Mining
Performance |
Timeline |
DISTRICT METALS |
Lundin Mining |
DISTRICT METALS and Lundin Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DISTRICT METALS and Lundin Mining
The main advantage of trading using opposite DISTRICT METALS and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DISTRICT METALS 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.DISTRICT METALS vs. Rio Tinto Group | DISTRICT METALS vs. Anglo American plc | DISTRICT METALS vs. Liontown Resources Limited | DISTRICT METALS vs. NEXA RESOURCES SA |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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