Correlation Between MAG SILVER and Carsales
Can any of the company-specific risk be diversified away by investing in both MAG SILVER and Carsales 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 Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAG SILVER and CarsalesCom, you can compare the effects of market volatilities on MAG SILVER and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG SILVER and Carsales.
Diversification Opportunities for MAG SILVER and Carsales
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MAG and Carsales is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding MAG SILVER and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of MAG SILVER i.e., MAG SILVER and Carsales go up and down completely randomly.
Pair Corralation between MAG SILVER and Carsales
Assuming the 90 days trading horizon MAG SILVER is expected to under-perform the Carsales. In addition to that, MAG SILVER is 1.47 times more volatile than CarsalesCom. It trades about -0.18 of its total potential returns per unit of risk. CarsalesCom is currently generating about -0.1 per unit of volatility. If you would invest 2,340 in CarsalesCom on October 12, 2024 and sell it today you would lose (60.00) from holding CarsalesCom or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
MAG SILVER vs. CarsalesCom
Performance |
| Timeline |
| MAG SILVER |
| CarsalesCom |
MAG SILVER and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG SILVER and Carsales
The main advantage of trading using opposite MAG SILVER and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG SILVER position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| MAG SILVER vs. EVS Broadcast Equipment | MAG SILVER vs. GLOBUS MEDICAL A | MAG SILVER vs. Air Transport Services | MAG SILVER vs. NAGOYA RAILROAD |
| Carsales vs. GALENA MINING LTD | Carsales vs. MCEWEN MINING INC | Carsales vs. MAG SILVER | Carsales vs. Japan Tobacco |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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