Correlation Between McEwen Mining and Axfood AB
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and Axfood AB 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 Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and Axfood AB, you can compare the effects of market volatilities on McEwen Mining and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Axfood AB.
Diversification Opportunities for McEwen Mining and Axfood AB
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between McEwen and Axfood is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of McEwen Mining i.e., McEwen Mining and Axfood AB go up and down completely randomly.
Pair Corralation between McEwen Mining and Axfood AB
Assuming the 90 days trading horizon McEwen Mining is expected to under-perform the Axfood AB. In addition to that, McEwen Mining is 2.19 times more volatile than Axfood AB. It trades about -0.4 of its total potential returns per unit of risk. Axfood AB is currently generating about 0.02 per unit of volatility. If you would invest 23,600 in Axfood AB on August 31, 2024 and sell it today you would earn a total of 90.00 from holding Axfood AB or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McEwen Mining vs. Axfood AB
Performance |
| Timeline |
| McEwen Mining |
| Axfood AB |
McEwen Mining and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and Axfood AB
The main advantage of trading using opposite McEwen Mining and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| McEwen Mining vs. Datalogic | McEwen Mining vs. Federal Realty Investment | McEwen Mining vs. Bankers Investment Trust | McEwen Mining vs. Automatic Data Processing |
| Axfood AB vs. Take Two Interactive Software | Axfood AB vs. Melia Hotels | Axfood AB vs. Microchip Technology | Axfood AB vs. Compagnie Plastic Omnium |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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