Correlation Between MCEWEN MINING and STMicroelectronics

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

By analyzing existing cross correlation between MCEWEN MINING INC and STMicroelectronics NV, you can compare the effects of market volatilities on MCEWEN MINING and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCEWEN MINING and STMicroelectronics.

Diversification Opportunities for MCEWEN MINING and STMicroelectronics

0.47

Correlation Coefficient

MCEWEN MINING  STMicroelectronics

Very weak diversification

The 3 months correlation between MCEWEN and STMicroelectronics is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MCEWEN MINING INC and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 INC are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of MCEWEN MINING i.e., MCEWEN MINING and STMicroelectronics go up and down completely randomly.

Pair Corralation between MCEWEN MINING and STMicroelectronics

Assuming the 90 days horizon MCEWEN MINING INC is expected to generate 1.7 times more return on investment than STMicroelectronics. However, MCEWEN MINING is 1.7 times more volatile than STMicroelectronics NV. It trades about 0.03 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.02 per unit of risk. If you would invest  795.00  in MCEWEN MINING INC on September 12, 2024 and sell it today you would earn a total of  20.00  from holding MCEWEN MINING INC or generate 2.52% return on investment over 90 days.

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

MCEWEN MINING INC  vs.  STMicroelectronics NV

MCEWEN MINING INC

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MCEWEN MINING INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MCEWEN MINING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

STMicroelectronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STMicroelectronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MCEWEN MINING and STMicroelectronics

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

The idea behind MCEWEN MINING INC and STMicroelectronics NV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.