Correlation Between Tesla and McEwen Mining

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

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

Diversification Opportunities for Tesla and McEwen Mining

0.23

Correlation Coefficient

Tesla  McEwen Mining

Modest diversification

The 3 months correlation between Tesla and McEwen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Tesla 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 Tesla Inc 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 Tesla i.e., Tesla and McEwen Mining go up and down completely randomly.

Pair Corralation between Tesla and McEwen Mining

If you would invest  511,105  in Tesla Inc on September 29, 2024 and sell it today you would earn a total of  365,383  from holding Tesla Inc or generate 71.49% return on investment over 90 days.

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

Tesla Inc  vs.  McEwen Mining

Tesla Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Tesla showed 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 fairly strong basic indicators, McEwen Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tesla and McEwen Mining

The main advantage of trading using opposite Tesla and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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 Tesla Inc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.