Correlation Between Hochschild Mining and McEwen Mining
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining 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 Hochschild Mining and McEwen Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hochschild Mining plc and McEwen Mining, you can compare the effects of market volatilities on Hochschild Mining 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 Hochschild Mining with a short position of McEwen Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and McEwen Mining.
Diversification Opportunities for Hochschild Mining and McEwen Mining
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hochschild and McEwen is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Hochschild 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 Hochschild Mining plc 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 Hochschild Mining i.e., Hochschild Mining and McEwen Mining go up and down completely randomly.
Pair Corralation between Hochschild Mining and McEwen Mining
Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 0.84 times more return on investment than McEwen Mining. However, Hochschild Mining plc is 1.2 times less risky than McEwen Mining. It trades about 0.12 of its potential returns per unit of risk. McEwen Mining is currently generating about 0.03 per unit of risk. If you would invest 10,080 in Hochschild Mining plc on August 31, 2024 and sell it today you would earn a total of 11,320 from holding Hochschild Mining plc or generate 112.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.82% |
| Values | Daily Returns |
Hochschild Mining plc vs. McEwen Mining
Performance |
| Timeline |
| Hochschild Mining plc |
| McEwen Mining |
Hochschild Mining and McEwen Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and McEwen Mining
The main advantage of trading using opposite Hochschild Mining and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining 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.The idea behind Hochschild Mining plc and McEwen Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| McEwen Mining vs. Datalogic | McEwen Mining vs. Federal Realty Investment | McEwen Mining vs. Bankers Investment Trust | McEwen Mining vs. Automatic Data Processing |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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