Correlation Between Aberdeen Diversified and McEwen Mining

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

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

Diversification Opportunities for Aberdeen Diversified and McEwen Mining

-0.02

Correlation Coefficient

Aberdeen Diversified  McEwen Mining

Good diversification

The 3 months correlation between Aberdeen and McEwen is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Diversified Income and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Aberdeen Diversified 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 Aberdeen Diversified Income 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 Aberdeen Diversified i.e., Aberdeen Diversified and McEwen Mining go up and down completely randomly.

Pair Corralation between Aberdeen Diversified and McEwen Mining

Assuming the 90 days trading horizon Aberdeen Diversified Income is expected to generate 0.66 times more return on investment than McEwen Mining. However, Aberdeen Diversified Income is 1.51 times less risky than McEwen Mining. It trades about -0.02 of its potential returns per unit of risk. McEwen Mining is currently generating about -0.07 per unit of risk. If you would invest  4,450  in Aberdeen Diversified Income on September 29, 2024 and sell it today you would lose (150.00) from holding Aberdeen Diversified Income or give up 3.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Aberdeen Diversified Income  vs.  McEwen Mining

Aberdeen Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Diversified Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aberdeen Diversified is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the 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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aberdeen Diversified and McEwen Mining

The main advantage of trading using opposite Aberdeen Diversified and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Diversified 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 Aberdeen Diversified Income 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.