Correlation Between MAG Silver and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Verizon Communications 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 Verizon Communications 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 Verizon Communications CDR, you can compare the effects of market volatilities on MAG Silver and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Verizon Communications.
Diversification Opportunities for MAG Silver and Verizon Communications
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MAG and Verizon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Verizon Communications CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of MAG Silver i.e., MAG Silver and Verizon Communications go up and down completely randomly.
Pair Corralation between MAG Silver and Verizon Communications
Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 1.98 times more return on investment than Verizon Communications. However, MAG Silver is 1.98 times more volatile than Verizon Communications CDR. It trades about 0.21 of its potential returns per unit of risk. Verizon Communications CDR is currently generating about -0.01 per unit of risk. If you would invest 2,028 in MAG Silver Corp on November 4, 2024 and sell it today you would earn a total of 256.00 from holding MAG Silver Corp or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAG Silver Corp vs. Verizon Communications CDR
Performance |
| Timeline |
| MAG Silver Corp |
| Verizon Communications |
MAG Silver and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG Silver and Verizon Communications
The main advantage of trading using opposite MAG Silver and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' 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 |
| Verizon Communications vs. Alphabet Inc CDR | Verizon Communications vs. Microsoft Corp CDR | Verizon Communications vs. NVIDIA CDR | Verizon Communications vs. Tesla Inc CDR |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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