Correlation Between McEwen Mining and United Parcel
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and United Parcel Service, you can compare the effects of market volatilities on McEwen Mining and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and United Parcel.
Diversification Opportunities for McEwen Mining and United Parcel
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McEwen and United is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of McEwen Mining i.e., McEwen Mining and United Parcel go up and down completely randomly.
Pair Corralation between McEwen Mining and United Parcel
Assuming the 90 days trading horizon McEwen Mining is expected to generate 3.31 times more return on investment than United Parcel. However, McEwen Mining is 3.31 times more volatile than United Parcel Service. It trades about 0.05 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.01 per unit of risk. If you would invest 7,500 in McEwen Mining on September 14, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
McEwen Mining vs. United Parcel Service
Performance |
| Timeline |
| McEwen Mining |
| United Parcel Service |
McEwen Mining and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and United Parcel
The main advantage of trading using opposite McEwen Mining and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| McEwen Mining vs. Compaa Minera Autln | McEwen Mining vs. The Select Sector | McEwen Mining vs. Promotora y Operadora | McEwen Mining vs. iShares Global Timber |
| United Parcel vs. Ameriprise Financial | United Parcel vs. Southern Copper | United Parcel vs. Lloyds Banking Group | United Parcel vs. Martin Marietta Materials |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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