Correlation Between IMPERIAL TOBACCO and MCEWEN MINING
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and MCEWEN MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and MCEWEN MINING INC, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of MCEWEN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and MCEWEN MINING.
Diversification Opportunities for IMPERIAL TOBACCO and MCEWEN MINING
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IMPERIAL and MCEWEN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and MCEWEN MINING INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCEWEN MINING INC and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 INC has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and MCEWEN MINING go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and MCEWEN MINING
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.3 times more return on investment than MCEWEN MINING. However, IMPERIAL TOBACCO is 3.31 times less risky than MCEWEN MINING. It trades about 0.17 of its potential returns per unit of risk. MCEWEN MINING INC is currently generating about 0.03 per unit of risk. If you would invest 2,002 in IMPERIAL TOBACCO on September 12, 2024 and sell it today you would earn a total of 1,151 from holding IMPERIAL TOBACCO or generate 57.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. MCEWEN MINING INC
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| MCEWEN MINING INC |
IMPERIAL TOBACCO and MCEWEN MINING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and MCEWEN MINING
The main advantage of trading using opposite IMPERIAL TOBACCO and MCEWEN MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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