Correlation Between MAG Silver and Electra Battery
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Electra Battery 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 MAG Silver and Electra Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAG Silver Corp and Electra Battery Materials, you can compare the effects of market volatilities on MAG Silver and Electra Battery 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 MAG Silver with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Electra Battery.
Diversification Opportunities for MAG Silver and Electra Battery
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAG and Electra is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery Materials and MAG 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 MAG Silver Corp are associated (or correlated) with Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of MAG Silver i.e., MAG Silver and Electra Battery go up and down completely randomly.
Pair Corralation between MAG Silver and Electra Battery
Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 0.72 times more return on investment than Electra Battery. However, MAG Silver Corp is 1.39 times less risky than Electra Battery. It trades about 0.12 of its potential returns per unit of risk. Electra Battery Materials is currently generating about -0.19 per unit of risk. If you would invest 2,071 in MAG Silver Corp on September 14, 2024 and sell it today you would earn a total of 107.00 from holding MAG Silver Corp or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAG Silver Corp vs. Electra Battery Materials
Performance |
| Timeline |
| MAG Silver Corp |
| Electra Battery Materials |
MAG Silver and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG Silver and Electra Battery
The main advantage of trading using opposite MAG Silver and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Electra Battery 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 Electra Battery will offset losses from the drop in Electra Battery's long position.| MAG Silver vs. Arizona Sonoran Copper | MAG Silver vs. Marimaca Copper Corp | MAG Silver vs. World Copper | MAG Silver vs. QC Copper and |
| Electra Battery vs. Foraco International SA | Electra Battery vs. Geodrill Limited | Electra Battery vs. Major Drilling Group | Electra Battery vs. Bri Chem 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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