Correlation Between McEwen Mining and NVIDIA

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

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

Diversification Opportunities for McEwen Mining and NVIDIA

0.77

Correlation Coefficient

McEwen Mining  NVIDIA

Poor diversification

The 3 months correlation between McEwen and NVIDIA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of McEwen Mining i.e., McEwen Mining and NVIDIA go up and down completely randomly.

Pair Corralation between McEwen Mining and NVIDIA

Assuming the 90 days trading horizon McEwen Mining is expected to generate 1.08 times less return on investment than NVIDIA. In addition to that, McEwen Mining is 1.03 times more volatile than NVIDIA. It trades about 0.13 of its total potential returns per unit of risk. NVIDIA is currently generating about 0.14 per unit of volatility. If you would invest  219,408  in NVIDIA on September 18, 2024 and sell it today you would earn a total of  46,140  from holding NVIDIA or generate 21.03% return on investment over 90 days.

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

McEwen Mining  vs.  NVIDIA

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.

NVIDIA

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, NVIDIA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McEwen Mining and NVIDIA

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

The idea behind McEwen Mining and NVIDIA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.