Correlation Between Wheaton Precious and MAG Silver
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and MAG Silver Corp, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and MAG Silver.
Diversification Opportunities for Wheaton Precious and MAG Silver
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wheaton and MAG is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals 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 Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and MAG Silver go up and down completely randomly.
Pair Corralation between Wheaton Precious and MAG Silver
Assuming the 90 days trading horizon Wheaton Precious is expected to generate 5.41 times less return on investment than MAG Silver. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.6 times less risky than MAG Silver. It trades about 0.06 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,987 in MAG Silver Corp on October 21, 2024 and sell it today you would earn a total of 207.00 from holding MAG Silver Corp or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. MAG Silver Corp
Performance |
| Timeline |
| Wheaton Precious Metals |
| MAG Silver Corp |
Wheaton Precious and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and MAG Silver
The main advantage of trading using opposite Wheaton Precious and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.| Wheaton Precious vs. Franco Nevada | Wheaton Precious vs. Pan American Silver | Wheaton Precious vs. Agnico Eagle Mines | Wheaton Precious vs. Sandstorm Gold Ltd |
| MAG Silver vs. Pan American Silver | MAG Silver vs. Endeavour Silver Corp | MAG Silver vs. SSR Mining | MAG Silver vs. Osisko Gold Ro |
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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