Correlation Between Lundin Mining and Bank of Ireland

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

Diversification Opportunities for Lundin Mining and Bank of Ireland

-0.44

Correlation Coefficient

Lundin Mining  Bank of Ireland

Very good diversification

The 3 months correlation between Lundin and Bank is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Lundin Mining i.e., Lundin Mining and Bank of Ireland go up and down completely randomly.

Pair Corralation between Lundin Mining and Bank of Ireland

Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 1.06 times more return on investment than Bank of Ireland. However, Lundin Mining is 1.06 times more volatile than Bank of Ireland. It trades about 0.1 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.09 per unit of risk. If you would invest  9,304  in Lundin Mining Corp on September 4, 2024 and sell it today you would earn a total of  1,496  from holding Lundin Mining Corp or generate 16.08% 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 Corp  vs.  Bank of Ireland

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.

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lundin Mining and Bank of Ireland

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

The idea behind Lundin Mining Corp and Bank of Ireland 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 Transaction History module to view history of all your transactions and understand their impact on performance.