Correlation Between MAG Silver and Silver One
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Silver One 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 Silver One 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 Silver One Resources, you can compare the effects of market volatilities on MAG Silver and Silver One 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 Silver One. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Silver One.
Diversification Opportunities for MAG Silver and Silver One
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAG and Silver is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Silver One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver One Resources 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 Silver One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver One Resources has no effect on the direction of MAG Silver i.e., MAG Silver and Silver One go up and down completely randomly.
Pair Corralation between MAG Silver and Silver One
Considering the 90-day investment horizon MAG Silver is expected to generate 1.61 times less return on investment than Silver One. But when comparing it to its historical volatility, MAG Silver Corp is 2.34 times less risky than Silver One. It trades about 0.08 of its potential returns per unit of risk. Silver One Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Silver One Resources on December 11, 2024 and sell it today you would earn a total of 5.00 from holding Silver One Resources or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAG Silver Corp vs. Silver One Resources
Performance |
| Timeline |
| MAG Silver Corp |
| Silver One Resources |
MAG Silver and Silver One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG Silver and Silver One
The main advantage of trading using opposite MAG Silver and Silver One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Silver One 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 Silver One will offset losses from the drop in Silver One'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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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