Correlation Between Lundin Energy and Mr Cooper

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

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

Diversification Opportunities for Lundin Energy and Mr Cooper

-0.78

Correlation Coefficient

Lundin Energy  Mr Cooper

Pay attention - limited upside

The 3 months correlation between Lundin and 07WA is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Mr Cooper Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr Cooper Group and Lundin Energy 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 Energy AB are associated (or correlated) with Mr Cooper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr Cooper Group has no effect on the direction of Lundin Energy i.e., Lundin Energy and Mr Cooper go up and down completely randomly.

Pair Corralation between Lundin Energy and Mr Cooper

Assuming the 90 days horizon Lundin Energy AB is expected to generate 2.2 times more return on investment than Mr Cooper. However, Lundin Energy is 2.2 times more volatile than Mr Cooper Group. It trades about 0.04 of its potential returns per unit of risk. Mr Cooper Group is currently generating about -0.19 per unit of risk. If you would invest  56.00  in Lundin Energy AB on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Lundin Energy AB or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Lundin Energy AB  vs.  Mr Cooper Group

Lundin Energy AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Energy AB 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mr Cooper Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Cooper Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mr Cooper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Energy and Mr Cooper

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

The idea behind Lundin Energy AB and Mr Cooper Group 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.