Correlation Between Guanajuato Silver and MAG Silver
Can any of the company-specific risk be diversified away by investing in both Guanajuato Silver 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 Guanajuato Silver and MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guanajuato Silver and MAG Silver Corp, you can compare the effects of market volatilities on Guanajuato Silver 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 Guanajuato Silver with a short position of MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guanajuato Silver and MAG Silver.
Diversification Opportunities for Guanajuato Silver and MAG Silver
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guanajuato and MAG is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Guanajuato 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 Guanajuato Silver 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 Guanajuato 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 Guanajuato Silver i.e., Guanajuato Silver and MAG Silver go up and down completely randomly.
Pair Corralation between Guanajuato Silver and MAG Silver
Assuming the 90 days horizon Guanajuato Silver is expected to under-perform the MAG Silver. In addition to that, Guanajuato Silver is 1.85 times more volatile than MAG Silver Corp. It trades about -0.02 of its total potential returns per unit of risk. MAG Silver Corp is currently generating about 0.02 per unit of volatility. If you would invest 1,241 in MAG Silver Corp on December 11, 2024 and sell it today you would earn a total of 177.00 from holding MAG Silver Corp or generate 14.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Guanajuato Silver vs. MAG Silver Corp
Performance |
| Timeline |
| Guanajuato Silver |
| MAG Silver Corp |
Guanajuato Silver and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guanajuato Silver and MAG Silver
The main advantage of trading using opposite Guanajuato Silver and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guanajuato Silver 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.| Guanajuato Silver vs. Aya Gold Silver | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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