Correlation Between McEwen Mining and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and Fortune Brands 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 McEwen Mining and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and Fortune Brands Home, you can compare the effects of market volatilities on McEwen Mining and Fortune Brands 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 McEwen Mining with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Fortune Brands.
Diversification Opportunities for McEwen Mining and Fortune Brands
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McEwen and Fortune is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and McEwen 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 McEwen Mining are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of McEwen Mining i.e., McEwen Mining and Fortune Brands go up and down completely randomly.
Pair Corralation between McEwen Mining and Fortune Brands
Assuming the 90 days trading horizon McEwen Mining is expected to under-perform the Fortune Brands. In addition to that, McEwen Mining is 1.8 times more volatile than Fortune Brands Home. It trades about -0.04 of its total potential returns per unit of risk. Fortune Brands Home is currently generating about -0.01 per unit of volatility. If you would invest 7,932 in Fortune Brands Home on September 12, 2024 and sell it today you would lose (154.00) from holding Fortune Brands Home or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.5% |
| Values | Daily Returns |
McEwen Mining vs. Fortune Brands Home
Performance |
| Timeline |
| McEwen Mining |
| Fortune Brands Home |
McEwen Mining and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and Fortune Brands
The main advantage of trading using opposite McEwen Mining and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| McEwen Mining vs. Samsung Electronics Co | McEwen Mining vs. Samsung Electronics Co | McEwen Mining vs. Hyundai Motor | McEwen Mining vs. Reliance Industries Ltd |
| Fortune Brands vs. METALL ZUG AG | Fortune Brands vs. Endeavour Mining Corp | Fortune Brands vs. Raytheon Technologies Corp | Fortune Brands vs. Hochschild Mining plc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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