Correlation Between Lundin Mining and United Natural

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

By analyzing existing cross correlation between Lundin Mining and United Natural Foods, you can compare the effects of market volatilities on Lundin Mining and United Natural 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 United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and United Natural.

Diversification Opportunities for Lundin Mining and United Natural

-0.58

Correlation Coefficient

Lundin Mining  United Natural

Excellent diversification

The 3 months correlation between Lundin and United is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods 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 are associated (or correlated) with United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of Lundin Mining i.e., Lundin Mining and United Natural go up and down completely randomly.

Pair Corralation between Lundin Mining and United Natural

Assuming the 90 days horizon Lundin Mining is expected to generate 2.44 times less return on investment than United Natural. But when comparing it to its historical volatility, Lundin Mining is 1.47 times less risky than United Natural. It trades about 0.04 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,378  in United Natural Foods on October 5, 2024 and sell it today you would earn a total of  1,206  from holding United Natural Foods or generate 87.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lundin Mining  vs.  United Natural Foods

Lundin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

United Natural Foods

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days United Natural Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, United Natural reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Mining and United Natural

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

The idea behind Lundin Mining and United Natural Foods 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.