Correlation Between MAG Silver and Neptune Digital
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Neptune Digital 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 Neptune Digital 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 Neptune Digital Assets, you can compare the effects of market volatilities on MAG Silver and Neptune Digital 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 Neptune Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Neptune Digital.
Diversification Opportunities for MAG Silver and Neptune Digital
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAG and Neptune is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Neptune Digital Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neptune Digital Assets 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 Neptune Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neptune Digital Assets has no effect on the direction of MAG Silver i.e., MAG Silver and Neptune Digital go up and down completely randomly.
Pair Corralation between MAG Silver and Neptune Digital
Assuming the 90 days trading horizon MAG Silver is expected to generate 4.6 times less return on investment than Neptune Digital. But when comparing it to its historical volatility, MAG Silver Corp is 5.37 times less risky than Neptune Digital. It trades about 0.13 of its potential returns per unit of risk. Neptune Digital Assets is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 97.00 in Neptune Digital Assets on September 13, 2024 and sell it today you would earn a total of 17.00 from holding Neptune Digital Assets or generate 17.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAG Silver Corp vs. Neptune Digital Assets
Performance |
| Timeline |
| MAG Silver Corp |
| Neptune Digital Assets |
MAG Silver and Neptune Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG Silver and Neptune Digital
The main advantage of trading using opposite MAG Silver and Neptune Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Neptune Digital 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 Neptune Digital will offset losses from the drop in Neptune Digital's long position.| MAG Silver vs. Pan American Silver | MAG Silver vs. Endeavour Silver Corp | MAG Silver vs. SSR Mining | MAG Silver vs. Osisko Gold Ro |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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