Correlation Between McEwen Mining and McKesson

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

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

Diversification Opportunities for McEwen Mining and McKesson

-0.75

Correlation Coefficient

McEwen Mining  McKesson

Pay attention - limited upside

The 3 months correlation between McEwen and McKesson is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson 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 McKesson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McKesson has no effect on the direction of McEwen Mining i.e., McEwen Mining and McKesson go up and down completely randomly.

Pair Corralation between McEwen Mining and McKesson

Assuming the 90 days trading horizon McEwen Mining is expected to under-perform the McKesson. In addition to that, McEwen Mining is 178.74 times more volatile than McKesson. It trades about -0.17 of its total potential returns per unit of risk. McKesson is currently generating about 0.13 per unit of volatility. If you would invest  1,198,119  in McKesson on December 23, 2024 and sell it today you would earn a total of  1,449  from holding McKesson or generate 0.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

McEwen Mining  vs.  McKesson

McEwen Mining

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

McKesson

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in McKesson are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, McKesson 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 McKesson

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

The idea behind McEwen Mining and McKesson 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.