Correlation Between McEwen Mining and American International
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and American International 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 American International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and American International Group, you can compare the effects of market volatilities on McEwen Mining and American International 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 American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and American International.
Diversification Opportunities for McEwen Mining and American International
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between McEwen and American is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International 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 American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of McEwen Mining i.e., McEwen Mining and American International go up and down completely randomly.
Pair Corralation between McEwen Mining and American International
Assuming the 90 days trading horizon McEwen Mining is expected to generate 13.94 times more return on investment than American International. However, McEwen Mining is 13.94 times more volatile than American International Group. It trades about 0.1 of its potential returns per unit of risk. American International Group is currently generating about 0.1 per unit of risk. If you would invest 7,500 in McEwen Mining on August 30, 2024 and sell it today you would earn a total of 12,300 from holding McEwen Mining or generate 164.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McEwen Mining vs. American International Group
Performance |
| Timeline |
| McEwen Mining |
| American International |
McEwen Mining and American International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and American International
The main advantage of trading using opposite McEwen Mining and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, American International 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 American International will offset losses from the drop in American International's long position.| McEwen Mining vs. The Select Sector | McEwen Mining vs. SPDR Series Trust | McEwen Mining vs. FibroGen | McEwen Mining vs. iShares Trust |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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