Correlation Between McEwen Mining and Cars

Can any of the company-specific risk be diversified away by investing in both McEwen Mining and Cars 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 Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between McEwen Mining and Cars Inc, you can compare the effects of market volatilities on McEwen Mining and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Cars.

Diversification Opportunities for McEwen Mining and Cars

-0.54

Correlation Coefficient

McEwen Mining  Cars

Excellent diversification

The 3 months correlation between McEwen and Cars is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of McEwen Mining i.e., McEwen Mining and Cars go up and down completely randomly.

Pair Corralation between McEwen Mining and Cars

Assuming the 90 days trading horizon McEwen Mining is expected to generate 12.7 times less return on investment than Cars. But when comparing it to its historical volatility, McEwen Mining is 1.03 times less risky than Cars. It trades about 0.01 of its potential returns per unit of risk. Cars Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,764  in Cars Inc on September 3, 2024 and sell it today you would earn a total of  209.00  from holding Cars Inc or generate 11.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	56.92%
Values	Daily Returns

McEwen Mining  vs.  Cars Inc

McEwen Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McEwen Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, McEwen Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cars Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cars Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Cars unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McEwen Mining and Cars

The main advantage of trading using opposite McEwen Mining and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.

The idea behind McEwen Mining and Cars Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.