Correlation Between McEwen Mining and FibraHotel

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

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

Diversification Opportunities for McEwen Mining and FibraHotel

-0.13

Correlation Coefficient

McEwen Mining  FibraHotel

Good diversification

The 3 months correlation between McEwen and FibraHotel is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of McEwen Mining i.e., McEwen Mining and FibraHotel go up and down completely randomly.

Pair Corralation between McEwen Mining and FibraHotel

Assuming the 90 days trading horizon McEwen Mining is expected to generate 1.15 times more return on investment than FibraHotel. However, McEwen Mining is 1.15 times more volatile than FibraHotel. It trades about 0.13 of its potential returns per unit of risk. FibraHotel is currently generating about 0.0 per unit of risk. If you would invest  16,600  in McEwen Mining on September 1, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

McEwen Mining  vs.  FibraHotel

McEwen Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in McEwen Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, McEwen Mining showed solid returns over the last few months and may actually be approaching a breakup point.

FibraHotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FibraHotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, FibraHotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with McEwen Mining and FibraHotel

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

The idea behind McEwen Mining and FibraHotel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.