Correlation Between McEwen Mining and Volkswagen
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and Volkswagen 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 Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and Volkswagen AG Non Vtg, you can compare the effects of market volatilities on McEwen Mining and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Volkswagen.
Diversification Opportunities for McEwen Mining and Volkswagen
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McEwen and Volkswagen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Volkswagen AG Non Vtg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG Non 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG Non has no effect on the direction of McEwen Mining i.e., McEwen Mining and Volkswagen go up and down completely randomly.
Pair Corralation between McEwen Mining and Volkswagen
Assuming the 90 days trading horizon McEwen Mining is expected to generate 2.33 times more return on investment than Volkswagen. However, McEwen Mining is 2.33 times more volatile than Volkswagen AG Non Vtg. It trades about 0.16 of its potential returns per unit of risk. Volkswagen AG Non Vtg is currently generating about 0.08 per unit of risk. If you would invest 810.00 in McEwen Mining on September 13, 2024 and sell it today you would earn a total of 93.00 from holding McEwen Mining or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McEwen Mining vs. Volkswagen AG Non Vtg
Performance |
| Timeline |
| McEwen Mining |
| Volkswagen AG Non |
McEwen Mining and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and Volkswagen
The main advantage of trading using opposite McEwen Mining and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's 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 |
| Volkswagen vs. National Beverage Corp | Volkswagen vs. Amedeo Air Four | Volkswagen vs. Infrastrutture Wireless Italiane | Volkswagen vs. MTI Wireless Edge |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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