Correlation Between MAG Silver and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Wheaton Precious 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 Wheaton Precious 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 Wheaton Precious Metals, you can compare the effects of market volatilities on MAG Silver and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Wheaton Precious.
Diversification Opportunities for MAG Silver and Wheaton Precious
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MAG and Wheaton is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of MAG Silver i.e., MAG Silver and Wheaton Precious go up and down completely randomly.
Pair Corralation between MAG Silver and Wheaton Precious
Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 1.6 times more return on investment than Wheaton Precious. However, MAG Silver is 1.6 times more volatile than Wheaton Precious Metals. It trades about 0.21 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.06 per unit of risk. If you would invest 1,987 in MAG Silver Corp on October 21, 2024 and sell it today you would earn a total of 207.00 from holding MAG Silver Corp or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAG Silver Corp vs. Wheaton Precious Metals
Performance |
| Timeline |
| MAG Silver Corp |
| Wheaton Precious Metals |
MAG Silver and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG Silver and Wheaton Precious
The main advantage of trading using opposite MAG Silver and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' 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 |
| Wheaton Precious vs. Franco Nevada | Wheaton Precious vs. Pan American Silver | Wheaton Precious vs. Agnico Eagle Mines | Wheaton Precious vs. Sandstorm Gold Ltd |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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