Correlation Between McEwen Mining and Almaden Minerals

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

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

Diversification Opportunities for McEwen Mining and Almaden Minerals

0.42

Correlation Coefficient

McEwen Mining  Almaden Minerals

Very weak diversification

The 3 months correlation between McEwen and Almaden is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Almaden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almaden Minerals 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 Almaden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almaden Minerals has no effect on the direction of McEwen Mining i.e., McEwen Mining and Almaden Minerals go up and down completely randomly.

Pair Corralation between McEwen Mining and Almaden Minerals

Considering the 90-day investment horizon McEwen Mining is expected to generate 0.5 times more return on investment than Almaden Minerals. However, McEwen Mining is 1.99 times less risky than Almaden Minerals. It trades about 0.07 of its potential returns per unit of risk. Almaden Minerals is currently generating about -0.04 per unit of risk. If you would invest  733.00  in McEwen Mining on January 19, 2024 and sell it today you would earn a total of  371.00  from holding McEwen Mining or generate 50.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.48%
Values	Daily Returns

McEwen Mining  vs.  Almaden Minerals

McEwen Mining

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in McEwen Mining are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, McEwen Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Almaden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almaden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with McEwen Mining and Almaden Minerals

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

The idea behind McEwen Mining and Almaden Minerals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.