Correlation Between McEwen Mining and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and Prudential Financial 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 Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and Prudential Financial, you can compare the effects of market volatilities on McEwen Mining and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Prudential Financial.
Diversification Opportunities for McEwen Mining and Prudential Financial
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between McEwen and Prudential is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of McEwen Mining i.e., McEwen Mining and Prudential Financial go up and down completely randomly.
Pair Corralation between McEwen Mining and Prudential Financial
Assuming the 90 days trading horizon McEwen Mining is expected to generate 68.11 times more return on investment than Prudential Financial. However, McEwen Mining is 68.11 times more volatile than Prudential Financial. It trades about 0.1 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.13 per unit of risk. If you would invest 7,500 in McEwen Mining on August 29, 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. Prudential Financial
Performance |
| Timeline |
| McEwen Mining |
| Prudential Financial |
McEwen Mining and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and Prudential Financial
The main advantage of trading using opposite McEwen Mining and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| McEwen Mining vs. The Select Sector | McEwen Mining vs. SPDR Series Trust | McEwen Mining vs. FibroGen | McEwen Mining vs. iShares Trust |
| Prudential Financial vs. The Select Sector | Prudential Financial vs. SPDR Series Trust | Prudential Financial vs. FibroGen | Prudential Financial vs. iShares Trust |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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