Correlation Between Globex Mining and MAG Silver
Can any of the company-specific risk be diversified away by investing in both Globex Mining 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 Globex Mining and MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and MAG Silver Corp, you can compare the effects of market volatilities on Globex Mining 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 Globex Mining with a short position of MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and MAG Silver.
Diversification Opportunities for Globex Mining and MAG Silver
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Globex and MAG is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises 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 Globex 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 Globex Mining Enterprises 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 Globex Mining i.e., Globex Mining and MAG Silver go up and down completely randomly.
Pair Corralation between Globex Mining and MAG Silver
Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 0.98 times more return on investment than MAG Silver. However, Globex Mining Enterprises is 1.02 times less risky than MAG Silver. It trades about 0.1 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 103.00 in Globex Mining Enterprises on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Globex Mining Enterprises or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globex Mining Enterprises vs. MAG Silver Corp
Performance |
| Timeline |
| Globex Mining Enterprises |
| MAG Silver Corp |
Globex Mining and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and MAG Silver
The main advantage of trading using opposite Globex Mining and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining 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.| Globex Mining vs. First Majestic Silver | Globex Mining vs. Ivanhoe Energy | Globex Mining vs. Orezone Gold Corp | Globex Mining 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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