Correlation Between Nasdaq and Lundin Mining

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

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

Diversification Opportunities for Nasdaq and Lundin Mining

0.01

Correlation Coefficient

Nasdaq  Lundin Mining

Significant diversification

The 3 months correlation between Nasdaq and Lundin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining and Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Lundin Mining go up and down completely randomly.

Pair Corralation between Nasdaq and Lundin Mining

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Lundin Mining. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 2.11 times less risky than Lundin Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Lundin Mining is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  848.00  in Lundin Mining on December 11, 2024 and sell it today you would lose (44.00) from holding Lundin Mining or give up 5.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  Lundin Mining

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Lundin Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lundin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nasdaq and Lundin Mining

The main advantage of trading using opposite Nasdaq and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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.

The idea behind Nasdaq Inc and Lundin Mining 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.