Correlation Between Cleveland Cliffs and McEwen Mining

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

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

Diversification Opportunities for Cleveland Cliffs and McEwen Mining

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Correlation Coefficient

Cleveland Cliffs  McEwen Mining

Pay attention - limited upside

The 3 months correlation between Cleveland and McEwen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Cleveland Cliffs 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 Cleveland Cliffs 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 Cleveland Cliffs i.e., Cleveland Cliffs and McEwen Mining go up and down completely randomly.

Pair Corralation between Cleveland Cliffs and McEwen Mining

Assuming the 90 days trading horizon Cleveland Cliffs is expected to under-perform the McEwen Mining. But the stock apears to be less risky and, when comparing its historical volatility, Cleveland Cliffs is 1.84 times less risky than McEwen Mining. The stock trades about -0.03 of its potential returns per unit of risk. The McEwen Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,500  in McEwen Mining on October 12, 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	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cleveland Cliffs  vs.  McEwen Mining

Cleveland Cliffs

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Cleveland Cliffs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 fairly strong basic indicators, McEwen Mining is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cleveland Cliffs and McEwen Mining

The main advantage of trading using opposite Cleveland Cliffs and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs 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.

The idea behind Cleveland Cliffs and McEwen Mining 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.