Correlation Between Rio Tinto and McEwen Mining
Can any of the company-specific risk be diversified away by investing in both Rio Tinto 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 Rio Tinto and McEwen Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto Group and McEwen Mining, you can compare the effects of market volatilities on Rio Tinto 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 Rio Tinto with a short position of McEwen Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and McEwen Mining.
Diversification Opportunities for Rio Tinto and McEwen Mining
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rio and McEwen is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto Group and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Rio Tinto 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 Rio Tinto Group 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 Rio Tinto i.e., Rio Tinto and McEwen Mining go up and down completely randomly.
Pair Corralation between Rio Tinto and McEwen Mining
If you would invest 123,000 in Rio Tinto Group on August 25, 2024 and sell it today you would earn a total of 1,515 from holding Rio Tinto Group or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto Group vs. McEwen Mining
Performance |
| Timeline |
| Rio Tinto Group |
| McEwen Mining |
Rio Tinto and McEwen Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and McEwen Mining
The main advantage of trading using opposite Rio Tinto and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto 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.| Rio Tinto vs. Vale SA | Rio Tinto vs. Glencore plc | Rio Tinto vs. Cleveland Cliffs | Rio Tinto vs. Minera Frisco SAB |
| McEwen Mining vs. Ameriprise Financial | McEwen Mining vs. United Airlines Holdings | McEwen Mining vs. Capital One Financial | McEwen Mining vs. First Republic Bank |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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