Correlation Between McEwen Mining and Desarrolladora Homex

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

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

Diversification Opportunities for McEwen Mining and Desarrolladora Homex

-0.55

Correlation Coefficient

McEwen Mining  Desarrolladora Homex

Excellent diversification

The 3 months correlation between McEwen and Desarrolladora is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Desarrolladora Homex SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desarrolladora Homex SAB 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 Desarrolladora Homex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desarrolladora Homex SAB has no effect on the direction of McEwen Mining i.e., McEwen Mining and Desarrolladora Homex go up and down completely randomly.

Pair Corralation between McEwen Mining and Desarrolladora Homex

Assuming the 90 days trading horizon McEwen Mining is expected to generate 1.48 times more return on investment than Desarrolladora Homex. However, McEwen Mining is 1.48 times more volatile than Desarrolladora Homex SAB. It trades about 0.1 of its potential returns per unit of risk. Desarrolladora Homex SAB is currently generating about -0.17 per unit of risk. If you would invest  7,500  in McEwen Mining on September 24, 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	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

McEwen Mining  vs.  Desarrolladora Homex SAB

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.

Desarrolladora Homex SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desarrolladora Homex SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with McEwen Mining and Desarrolladora Homex

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

The idea behind McEwen Mining and Desarrolladora Homex SAB 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.