Correlation Between MAG Silver and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Silvercorp Metals 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 Silvercorp Metals 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 Silvercorp Metals, you can compare the effects of market volatilities on MAG Silver and Silvercorp Metals 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 Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Silvercorp Metals.
Diversification Opportunities for MAG Silver and Silvercorp Metals
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between MAG and Silvercorp is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp 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 Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of MAG Silver i.e., MAG Silver and Silvercorp Metals go up and down completely randomly.
Pair Corralation between MAG Silver and Silvercorp Metals
Assuming the 90 days horizon MAG Silver Corp is expected to generate 1.11 times more return on investment than Silvercorp Metals. However, MAG Silver is 1.11 times more volatile than Silvercorp Metals. It trades about -0.19 of its potential returns per unit of risk. Silvercorp Metals is currently generating about -0.23 per unit of risk. If you would invest 1,479 in MAG Silver Corp on September 23, 2024 and sell it today you would lose (157.00) from holding MAG Silver Corp or give up 10.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAG Silver Corp vs. Silvercorp Metals
Performance |
| Timeline |
| MAG Silver Corp |
| Silvercorp Metals |
MAG Silver and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG Silver and Silvercorp Metals
The main advantage of trading using opposite MAG Silver and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Silvercorp Metals 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 Silvercorp Metals will offset losses from the drop in Silvercorp Metals' long position.| MAG Silver vs. Pan American Silver | MAG Silver vs. First Majestic Silver | MAG Silver vs. Silvercorp Metals | MAG Silver vs. Endeavour Silver Corp |
| Silvercorp Metals vs. Pan American Silver | Silvercorp Metals vs. First Majestic Silver | Silvercorp Metals vs. MAG Silver Corp | Silvercorp Metals vs. Endeavour 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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