Correlation Between MAG Silver and Bald Eagle
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Bald Eagle 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 Bald Eagle 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 Bald Eagle Gold, you can compare the effects of market volatilities on MAG Silver and Bald Eagle 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 Bald Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Bald Eagle.
Diversification Opportunities for MAG Silver and Bald Eagle
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MAG and Bald is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Bald Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bald Eagle 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 Bald Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bald Eagle Gold has no effect on the direction of MAG Silver i.e., MAG Silver and Bald Eagle go up and down completely randomly.
Pair Corralation between MAG Silver and Bald Eagle
Considering the 90-day investment horizon MAG Silver is expected to generate 6.13 times less return on investment than Bald Eagle. But when comparing it to its historical volatility, MAG Silver Corp is 2.22 times less risky than Bald Eagle. It trades about 0.02 of its potential returns per unit of risk. Bald Eagle Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Bald Eagle Gold on December 11, 2024 and sell it today you would earn a total of 32.00 from holding Bald Eagle Gold or generate 188.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
MAG Silver Corp vs. Bald Eagle Gold
Performance |
| Timeline |
| MAG Silver Corp |
| Bald Eagle Gold |
MAG Silver and Bald Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG Silver and Bald Eagle
The main advantage of trading using opposite MAG Silver and Bald Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Bald Eagle 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 Bald Eagle will offset losses from the drop in Bald Eagle's long position.| MAG Silver vs. Silvercorp Metals | ||
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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