Correlation Between Arizona Gold and MAG Silver
Can any of the company-specific risk be diversified away by investing in both Arizona Gold and MAG Silver 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 Arizona Gold and MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arizona Gold Silver and MAG Silver Corp, you can compare the effects of market volatilities on Arizona Gold and MAG Silver 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 Arizona Gold with a short position of MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Gold and MAG Silver.
Diversification Opportunities for Arizona Gold and MAG Silver
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Arizona and MAG is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Gold Silver and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG Silver Corp and Arizona Gold 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 Arizona Gold Silver are associated (or correlated) with MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of Arizona Gold i.e., Arizona Gold and MAG Silver go up and down completely randomly.
Pair Corralation between Arizona Gold and MAG Silver
Assuming the 90 days horizon Arizona Gold Silver is expected to generate 1.39 times more return on investment than MAG Silver. However, Arizona Gold is 1.39 times more volatile than MAG Silver Corp. It trades about -0.05 of its potential returns per unit of risk. MAG Silver Corp is currently generating about -0.24 per unit of risk. If you would invest 45.00 in Arizona Gold Silver on August 29, 2024 and sell it today you would lose (2.00) from holding Arizona Gold Silver or give up 4.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arizona Gold Silver vs. MAG Silver Corp
Performance |
| Timeline |
| Arizona Gold Silver |
| MAG Silver Corp |
Arizona Gold and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arizona Gold and MAG Silver
The main advantage of trading using opposite Arizona Gold and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arizona Gold position performs unexpectedly, MAG Silver 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 MAG Silver will offset losses from the drop in MAG Silver's long position.| Arizona Gold vs. First Majestic Silver | Arizona Gold vs. Ivanhoe Energy | Arizona Gold vs. Orezone Gold Corp | Arizona Gold vs. Faraday Copper Corp |
| MAG Silver vs. First Majestic Silver | MAG Silver vs. Ivanhoe Energy | MAG Silver vs. Orezone Gold Corp | MAG Silver vs. Faraday Copper Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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