Correlation Between McEwen Mining and NIKE

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

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

Diversification Opportunities for McEwen Mining and NIKE

-0.54

Correlation Coefficient

McEwen Mining  NIKE

Excellent diversification

The 3 months correlation between McEwen and NIKE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc 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 NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc has no effect on the direction of McEwen Mining i.e., McEwen Mining and NIKE go up and down completely randomly.

Pair Corralation between McEwen Mining and NIKE

Assuming the 90 days trading horizon McEwen Mining is expected to generate 3.61 times more return on investment than NIKE. However, McEwen Mining is 3.61 times more volatile than NIKE Inc. It trades about 0.07 of its potential returns per unit of risk. NIKE Inc is currently generating about -0.02 per unit of risk. If you would invest  7,500  in McEwen Mining on September 25, 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	99.59%
Values	Daily Returns

McEwen Mining  vs.  NIKE Inc

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.

NIKE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIKE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with McEwen Mining and NIKE

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

The idea behind McEwen Mining and NIKE Inc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.