Correlation Between MAG Silver and Archon Minerals

Can any of the company-specific risk be diversified away by investing in both MAG Silver and Archon Minerals 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 Archon Minerals 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 Archon Minerals, you can compare the effects of market volatilities on MAG Silver and Archon Minerals 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 Archon Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Archon Minerals.

Diversification Opportunities for MAG Silver and Archon Minerals

-0.3

Correlation Coefficient

MAG Silver  Archon Minerals

Very good diversification

The 3 months correlation between MAG and Archon is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Archon Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archon Minerals 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 Archon Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archon Minerals has no effect on the direction of MAG Silver i.e., MAG Silver and Archon Minerals go up and down completely randomly.

Pair Corralation between MAG Silver and Archon Minerals

Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 0.57 times more return on investment than Archon Minerals. However, MAG Silver Corp is 1.74 times less risky than Archon Minerals. It trades about 0.09 of its potential returns per unit of risk. Archon Minerals is currently generating about -0.18 per unit of risk. If you would invest  1,987  in MAG Silver Corp on December 20, 2024 and sell it today you would earn a total of  279.00  from holding MAG Silver Corp or generate 14.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MAG Silver Corp  vs.  Archon Minerals

MAG Silver Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, MAG Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Archon Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archon Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with MAG Silver and Archon Minerals

The main advantage of trading using opposite MAG Silver and Archon Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Archon Minerals 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 Archon Minerals will offset losses from the drop in Archon Minerals' long position.

The idea behind MAG Silver Corp and Archon Minerals 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..