Correlation Between McEwen Mining and Hecla Mining

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

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

Diversification Opportunities for McEwen Mining and Hecla Mining

0.91

Correlation Coefficient

McEwen Mining  Hecla Mining

Almost no diversification

The 3 months correlation between McEwen and Hecla is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining 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 Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of McEwen Mining i.e., McEwen Mining and Hecla Mining go up and down completely randomly.

Pair Corralation between McEwen Mining and Hecla Mining

Considering the 90-day investment horizon McEwen Mining is expected to generate 1.21 times more return on investment than Hecla Mining. However, McEwen Mining is 1.21 times more volatile than Hecla Mining. It trades about -0.41 of its potential returns per unit of risk. Hecla Mining is currently generating about -0.5 per unit of risk. If you would invest  1,054  in McEwen Mining on August 30, 2024 and sell it today you would lose (232.00) from holding McEwen Mining or give up 22.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

McEwen Mining  vs.  Hecla Mining

McEwen Mining

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hecla Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hecla Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Hecla Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with McEwen Mining and Hecla Mining

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

The idea behind McEwen Mining and Hecla Mining 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.