Correlation Between Trainline Plc and McEwen Mining

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

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

Diversification Opportunities for Trainline Plc and McEwen Mining

-0.4

Correlation Coefficient

Trainline Plc  McEwen Mining

Very good diversification

The 3 months correlation between Trainline and McEwen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Trainline Plc and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Trainline Plc 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 Trainline Plc 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 Trainline Plc i.e., Trainline Plc and McEwen Mining go up and down completely randomly.

Pair Corralation between Trainline Plc and McEwen Mining

Assuming the 90 days trading horizon Trainline Plc is expected to generate 0.72 times more return on investment than McEwen Mining. However, Trainline Plc is 1.39 times less risky than McEwen Mining. It trades about 0.21 of its potential returns per unit of risk. McEwen Mining is currently generating about -0.03 per unit of risk. If you would invest  30,460  in Trainline Plc on September 2, 2024 and sell it today you would earn a total of  10,320  from holding Trainline Plc or generate 33.88% return on investment over 90 days.

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

Trainline Plc  vs.  McEwen Mining

Trainline Plc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trainline Plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trainline Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Trainline Plc and McEwen Mining

The main advantage of trading using opposite Trainline Plc and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trainline Plc 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 Trainline Plc 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.