Correlation Between MAG Silver and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Sandstorm Gold 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 Sandstorm Gold 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 Sandstorm Gold Ltd, you can compare the effects of market volatilities on MAG Silver and Sandstorm Gold 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 Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Sandstorm Gold.
Diversification Opportunities for MAG Silver and Sandstorm Gold
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAG and Sandstorm is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of MAG Silver i.e., MAG Silver and Sandstorm Gold go up and down completely randomly.
Pair Corralation between MAG Silver and Sandstorm Gold
Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 1.21 times more return on investment than Sandstorm Gold. However, MAG Silver is 1.21 times more volatile than Sandstorm Gold Ltd. It trades about 0.04 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.04 per unit of risk. If you would invest 1,724 in MAG Silver Corp on November 2, 2024 and sell it today you would earn a total of 631.00 from holding MAG Silver Corp or generate 36.6% 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. Sandstorm Gold Ltd
Performance |
| Timeline |
| MAG Silver Corp |
| Sandstorm Gold |
MAG Silver and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG Silver and Sandstorm Gold
The main advantage of trading using opposite MAG Silver and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Sandstorm Gold 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 Sandstorm Gold will offset losses from the drop in Sandstorm Gold'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 |
| Sandstorm Gold vs. Osisko Gold Ro | Sandstorm Gold vs. Wheaton Precious Metals | Sandstorm Gold vs. Seabridge Gold | Sandstorm Gold vs. MAG 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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