Correlation Between Lundin Gold and Woodside Energy

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

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

Diversification Opportunities for Lundin Gold and Woodside Energy

0.81

Correlation Coefficient

Lundin Gold  Woodside Energy

Very poor diversification

The 3 months correlation between Lundin and Woodside is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Gold and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy Group and Lundin Gold 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 Gold are associated (or correlated) with Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of Lundin Gold i.e., Lundin Gold and Woodside Energy go up and down completely randomly.

Pair Corralation between Lundin Gold and Woodside Energy

Assuming the 90 days trading horizon Lundin Gold is expected to generate 1.21 times less return on investment than Woodside Energy. In addition to that, Lundin Gold is 1.94 times more volatile than Woodside Energy Group. It trades about 0.09 of its total potential returns per unit of risk. Woodside Energy Group is currently generating about 0.22 per unit of volatility. If you would invest  1,138  in Woodside Energy Group on April 25, 2025 and sell it today you would earn a total of  273.00  from holding Woodside Energy Group or generate 23.99% return on investment over 90 days.

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

Lundin Gold  vs.  Woodside Energy Group

Lundin Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lundin Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Woodside Energy Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Woodside Energy Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Woodside Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lundin Gold and Woodside Energy

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

The idea behind Lundin Gold and Woodside Energy 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.