Correlation Between Eastern Platinum and McEwen Mining
Can any of the company-specific risk be diversified away by investing in both Eastern Platinum and McEwen Mining 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 Eastern Platinum and McEwen Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Platinum Limited and McEwen Mining, you can compare the effects of market volatilities on Eastern Platinum and McEwen Mining 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 Eastern Platinum with a short position of McEwen Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Platinum and McEwen Mining.
Diversification Opportunities for Eastern Platinum and McEwen Mining
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and McEwen is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Eastern Platinum 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 Eastern Platinum Limited are associated (or correlated) with McEwen Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McEwen Mining has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and McEwen Mining go up and down completely randomly.
Pair Corralation between Eastern Platinum and McEwen Mining
Assuming the 90 days horizon Eastern Platinum Limited is expected to under-perform the McEwen Mining. In addition to that, Eastern Platinum is 1.72 times more volatile than McEwen Mining. It trades about -0.05 of its total potential returns per unit of risk. McEwen Mining is currently generating about 0.12 per unit of volatility. If you would invest 808.00 in McEwen Mining on September 14, 2024 and sell it today you would earn a total of 64.00 from holding McEwen Mining or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Platinum Limited vs. McEwen Mining
Performance |
| Timeline |
| Eastern Platinum |
| McEwen Mining |
Eastern Platinum and McEwen Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Platinum and McEwen Mining
The main advantage of trading using opposite Eastern Platinum and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, McEwen Mining 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 McEwen Mining will offset losses from the drop in McEwen Mining's long position.| Eastern Platinum vs. Thunder Mountain Gold | Eastern Platinum vs. Chesapeake Gold Corp | Eastern Platinum vs. AbraSilver Resource Corp | Eastern Platinum vs. GoGold Resources |
| McEwen Mining vs. Endeavour Silver Corp | McEwen Mining vs. Fortuna Silver Mines | McEwen Mining vs. New Gold | McEwen Mining vs. Sandstorm Gold Ltd |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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