Correlation Between Target Corp and McEwen Mining

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

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

Diversification Opportunities for Target Corp and McEwen Mining

0.52

Correlation Coefficient

Target Corp  McEwen Mining

Very weak diversification

The 3 months correlation between Target and McEwen is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Target Corp and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Target Corp 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 Target Corp are associated (or correlated) with McEwen Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McEwen Mining has no effect on the direction of Target Corp i.e., Target Corp and McEwen Mining go up and down completely randomly.

Pair Corralation between Target Corp and McEwen Mining

Assuming the 90 days trading horizon Target Corp is expected to under-perform the McEwen Mining. But the stock apears to be less risky and, when comparing its historical volatility, Target Corp is 1.03 times less risky than McEwen Mining. The stock trades about -0.03 of its potential returns per unit of risk. The McEwen Mining is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  939.00  in McEwen Mining on September 14, 2024 and sell it today you would lose (67.00) from holding McEwen Mining or give up 7.14% of portfolio value over 90 days.

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

Target Corp  vs.  McEwen Mining

Target Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 comparatively stable basic indicators, McEwen Mining is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Target Corp and McEwen Mining

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

The idea behind Target Corp and McEwen 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.