Correlation Between Fortune Brands and McEwen Mining
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and McEwen Mining 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 Fortune Brands and McEwen Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Brands Home and McEwen Mining, you can compare the effects of market volatilities on Fortune Brands and McEwen Mining 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 Fortune Brands with a short position of McEwen Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and McEwen Mining.
Diversification Opportunities for Fortune Brands and McEwen Mining
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortune and McEwen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Fortune Brands 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 Fortune Brands Home are associated (or correlated) with McEwen Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McEwen Mining has no effect on the direction of Fortune Brands i.e., Fortune Brands and McEwen Mining go up and down completely randomly.
Pair Corralation between Fortune Brands and McEwen Mining
Assuming the 90 days trading horizon Fortune Brands is expected to generate 3.94 times less return on investment than McEwen Mining. But when comparing it to its historical volatility, Fortune Brands Home is 1.9 times less risky than McEwen Mining. It trades about 0.05 of its potential returns per unit of risk. McEwen Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 810.00 in McEwen Mining on September 13, 2024 and sell it today you would earn a total of 62.00 from holding McEwen Mining or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Fortune Brands Home vs. McEwen Mining
Performance |
| Timeline |
| Fortune Brands Home |
| McEwen Mining |
Fortune Brands and McEwen Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and McEwen Mining
The main advantage of trading using opposite Fortune Brands and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, McEwen Mining 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 McEwen Mining will offset losses from the drop in McEwen Mining's long position.| Fortune Brands vs. STMicroelectronics NV | Fortune Brands vs. Aeorema Communications Plc | Fortune Brands vs. Charter Communications Cl | Fortune Brands vs. Air Products Chemicals |
| McEwen Mining vs. Spirent Communications plc | McEwen Mining vs. Batm Advanced Communications | McEwen Mining vs. Auction Technology Group | McEwen Mining vs. Alfa Financial Software |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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