Correlation Between McEwen Mining and Central Asia
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and Central Asia 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 Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and Central Asia Metals, you can compare the effects of market volatilities on McEwen Mining and Central Asia 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 Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Central Asia.
Diversification Opportunities for McEwen Mining and Central Asia
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McEwen and Central is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals 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 Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of McEwen Mining i.e., McEwen Mining and Central Asia go up and down completely randomly.
Pair Corralation between McEwen Mining and Central Asia
Assuming the 90 days trading horizon McEwen Mining is expected to generate 2.02 times more return on investment than Central Asia. However, McEwen Mining is 2.02 times more volatile than Central Asia Metals. It trades about 0.04 of its potential returns per unit of risk. Central Asia Metals is currently generating about -0.01 per unit of risk. If you would invest 525.00 in McEwen Mining on September 1, 2024 and sell it today you would earn a total of 310.00 from holding McEwen Mining or generate 59.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
McEwen Mining vs. Central Asia Metals
Performance |
| Timeline |
| McEwen Mining |
| Central Asia Metals |
McEwen Mining and Central Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and Central Asia
The main advantage of trading using opposite McEwen Mining and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.| McEwen Mining vs. Pfeiffer Vacuum Technology | McEwen Mining vs. Spotify Technology SA | McEwen Mining vs. Check Point Software | McEwen Mining vs. Albion Technology General |
| Central Asia vs. Bisichi Mining PLC | Central Asia vs. McEwen Mining | Central Asia vs. Coeur Mining | Central Asia vs. GoldMining |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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