Correlation Between McEwen Mining and Cleveland Cliffs
Can any of the company-specific risk be diversified away by investing in both McEwen Mining and Cleveland Cliffs 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 Cleveland Cliffs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and Cleveland Cliffs, you can compare the effects of market volatilities on McEwen Mining and Cleveland Cliffs 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 Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Cleveland Cliffs.
Diversification Opportunities for McEwen Mining and Cleveland Cliffs
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between McEwen and Cleveland is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs 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 Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of McEwen Mining i.e., McEwen Mining and Cleveland Cliffs go up and down completely randomly.
Pair Corralation between McEwen Mining and Cleveland Cliffs
Assuming the 90 days trading horizon McEwen Mining is expected to generate 0.53 times more return on investment than Cleveland Cliffs. However, McEwen Mining is 1.88 times less risky than Cleveland Cliffs. It trades about 0.13 of its potential returns per unit of risk. Cleveland Cliffs is currently generating about -0.04 per unit of risk. If you would invest 16,600 in McEwen Mining on September 24, 2024 and sell it today you would earn a total of 3,200 from holding McEwen Mining or generate 19.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.39% |
Values | Daily Returns |
McEwen Mining vs. Cleveland Cliffs
Performance |
Timeline |
McEwen Mining |
Cleveland Cliffs |
McEwen Mining and Cleveland Cliffs Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with McEwen Mining and Cleveland Cliffs
The main advantage of trading using opposite McEwen Mining and Cleveland Cliffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining position performs unexpectedly, Cleveland Cliffs 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 Cleveland Cliffs will offset losses from the drop in Cleveland Cliffs' long position.McEwen Mining vs. BHP Group | McEwen Mining vs. Rio Tinto Group | McEwen Mining vs. Vale SA | McEwen Mining vs. Glencore plc |
Cleveland Cliffs vs. BHP Group | Cleveland Cliffs vs. Rio Tinto Group | Cleveland Cliffs vs. Vale SA | Cleveland Cliffs vs. Glencore plc |
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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