Correlation Between McEwen Mining and London Security
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and London Security 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 London Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and London Security Plc, you can compare the effects of market volatilities on McEwen Mining and London Security 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 London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and London Security.
Diversification Opportunities for McEwen Mining and London Security
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between McEwen and London is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security Plc 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 London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of McEwen Mining i.e., McEwen Mining and London Security go up and down completely randomly.
Pair Corralation between McEwen Mining and London Security
Assuming the 90 days trading horizon McEwen Mining is expected to generate 3.39 times more return on investment than London Security. However, McEwen Mining is 3.39 times more volatile than London Security Plc. It trades about 0.04 of its potential returns per unit of risk. London Security Plc is currently generating about 0.06 per unit of risk. If you would invest 768.00 in McEwen Mining on September 12, 2024 and sell it today you would earn a total of 135.00 from holding McEwen Mining or generate 17.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.42% |
| Values | Daily Returns |
McEwen Mining vs. London Security Plc
Performance |
| Timeline |
| McEwen Mining |
| London Security Plc |
McEwen Mining and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and London Security
The main advantage of trading using opposite McEwen Mining and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security's long position.| McEwen Mining vs. Impax Environmental Markets | McEwen Mining vs. Amedeo Air Four | McEwen Mining vs. Sealed Air Corp | McEwen Mining vs. Flow Traders NV |
| London Security vs. McEwen Mining | London Security vs. Arrow Electronics | London Security vs. Pets at Home | London Security vs. Beazer Homes USA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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