Correlation Between Nasdaq and MAG Silver
Can any of the company-specific risk be diversified away by investing in both Nasdaq and MAG Silver 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 Nasdaq and MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and MAG Silver Corp, you can compare the effects of market volatilities on Nasdaq and MAG Silver 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 Nasdaq with a short position of MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and MAG Silver.
Diversification Opportunities for Nasdaq and MAG Silver
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nasdaq and MAG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG Silver Corp and Nasdaq 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 Nasdaq Inc are associated (or correlated) with MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of Nasdaq i.e., Nasdaq and MAG Silver go up and down completely randomly.
Pair Corralation between Nasdaq and MAG Silver
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.44 times more return on investment than MAG Silver. However, Nasdaq Inc is 2.29 times less risky than MAG Silver. It trades about 0.05 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.01 per unit of risk. If you would invest 5,991 in Nasdaq Inc on September 23, 2024 and sell it today you would earn a total of 1,779 from holding Nasdaq Inc or generate 29.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.03% |
| Values | Daily Returns |
Nasdaq Inc vs. MAG Silver Corp
Performance |
| Timeline |
| Nasdaq Inc |
| MAG Silver Corp |
Nasdaq and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and MAG Silver
The main advantage of trading using opposite Nasdaq and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, MAG Silver 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 MAG Silver will offset losses from the drop in MAG Silver's long position.The idea behind Nasdaq Inc and MAG Silver Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MAG Silver vs. Pan American Silver | MAG Silver vs. First Majestic Silver | MAG Silver vs. Silvercorp Metals | MAG Silver 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 CEOs Directory module to screen CEOs from public companies around the world.
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