Correlation Between Dow Jones and MAG Silver
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and MAG Silver Corp, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MAG Silver.
Diversification Opportunities for Dow Jones and MAG Silver
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and MAG is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and MAG Silver go up and down completely randomly.
Pair Corralation between Dow Jones and MAG Silver
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.26 times more return on investment than MAG Silver. However, Dow Jones Industrial is 3.89 times less risky than MAG Silver. It trades about 0.08 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.02 per unit of risk. If you would invest 3,359,634 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 1,070,017 from holding Dow Jones Industrial or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. MAG Silver Corp
Performance |
| Timeline |
Dow Jones and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
MAG Silver Corp
Pair trading matchups for MAG Silver
Pair Trading with Dow Jones and MAG Silver
The main advantage of trading using opposite Dow Jones and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| MAG Silver vs. Silvercorp Metals | MAG Silver vs. Dolly Varden Silver | MAG Silver vs. Aya Gold Silver | MAG Silver vs. Reyna Silver 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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