Correlation Between New Gold and McEwen Mining
Can any of the company-specific risk be diversified away by investing in both New Gold 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 New Gold and McEwen Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and McEwen Mining, you can compare the effects of market volatilities on New Gold 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 New Gold with a short position of McEwen Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and McEwen Mining.
Diversification Opportunities for New Gold and McEwen Mining
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and McEwen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and New Gold 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 New Gold 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 New Gold i.e., New Gold and McEwen Mining go up and down completely randomly.
Pair Corralation between New Gold and McEwen Mining
Considering the 90-day investment horizon New Gold is expected to generate 0.94 times more return on investment than McEwen Mining. However, New Gold is 1.06 times less risky than McEwen Mining. It trades about 0.07 of its potential returns per unit of risk. McEwen Mining is currently generating about 0.04 per unit of risk. If you would invest 115.00 in New Gold on August 24, 2024 and sell it today you would earn a total of 173.00 from holding New Gold or generate 150.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Gold vs. McEwen Mining
Performance |
| Timeline |
| New Gold |
| McEwen Mining |
New Gold and McEwen Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and McEwen Mining
The main advantage of trading using opposite New Gold and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold 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.| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
| McEwen Mining vs. Endeavour Silver Corp | McEwen Mining vs. Fortuna Silver Mines | McEwen Mining vs. New Gold | McEwen Mining vs. Sandstorm Gold Ltd |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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