Correlation Between Stillwater Critical and Lundin Gold

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

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

Diversification Opportunities for Stillwater Critical and Lundin Gold

-0.38

Correlation Coefficient

Stillwater Critical  Lundin Gold

Very good diversification

The 3 months correlation between Stillwater and Lundin is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Stillwater Critical Minerals and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and Stillwater Critical 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 Stillwater Critical Minerals are associated (or correlated) with Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of Stillwater Critical i.e., Stillwater Critical and Lundin Gold go up and down completely randomly.

Pair Corralation between Stillwater Critical and Lundin Gold

Assuming the 90 days horizon Stillwater Critical is expected to generate 3.34 times less return on investment than Lundin Gold. In addition to that, Stillwater Critical is 2.22 times more volatile than Lundin Gold. It trades about 0.03 of its total potential returns per unit of risk. Lundin Gold is currently generating about 0.22 per unit of volatility. If you would invest  3,100  in Lundin Gold on December 25, 2024 and sell it today you would earn a total of  1,238  from holding Lundin Gold or generate 39.94% return on investment over 90 days.

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

Stillwater Critical Minerals  vs.  Lundin Gold

Stillwater Critical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stillwater Critical Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Stillwater Critical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lundin Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Gold are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Lundin Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stillwater Critical and Lundin Gold

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

The idea behind Stillwater Critical Minerals and Lundin Gold 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.