Correlation Between Lundin Mining and CVS Health

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

Diversification Opportunities for Lundin Mining and CVS Health

0.26

Correlation Coefficient

Lundin Mining  CVS Health

Modest diversification

The 3 months correlation between Lundin and CVS is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Lundin Mining i.e., Lundin Mining and CVS Health go up and down completely randomly.

Pair Corralation between Lundin Mining and CVS Health

Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 0.96 times more return on investment than CVS Health. However, Lundin Mining Corp is 1.04 times less risky than CVS Health. It trades about 0.1 of its potential returns per unit of risk. CVS Health Corp is currently generating about 0.0 per unit of risk. If you would invest  9,097  in Lundin Mining Corp on September 12, 2024 and sell it today you would earn a total of  1,393  from holding Lundin Mining Corp or generate 15.31% return on investment over 90 days.

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

Lundin Mining Corp  vs.  CVS Health Corp

Lundin Mining Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Mining Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lundin Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

CVS Health Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CVS Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CVS Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lundin Mining and CVS Health

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

The idea behind Lundin Mining Corp and CVS Health 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.