Correlation Between MAG Silver and Avrupa Minerals

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

Diversification Opportunities for MAG Silver and Avrupa Minerals

0.47

Correlation Coefficient

MAG Silver  Avrupa Minerals

Very weak diversification

The 3 months correlation between MAG and Avrupa is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Avrupa Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avrupa 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 Avrupa Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avrupa Minerals has no effect on the direction of MAG Silver i.e., MAG Silver and Avrupa Minerals go up and down completely randomly.

Pair Corralation between MAG Silver and Avrupa Minerals

Assuming the 90 days trading horizon MAG Silver Corp is expected to under-perform the Avrupa Minerals. But the stock apears to be less risky and, when comparing its historical volatility, MAG Silver Corp is 2.81 times less risky than Avrupa Minerals. The stock trades about -0.07 of its potential returns per unit of risk. The Avrupa Minerals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Avrupa Minerals on October 22, 2024 and sell it today you would lose (0.50) from holding Avrupa Minerals or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

MAG Silver Corp  vs.  Avrupa Minerals

MAG Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAG Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Avrupa Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avrupa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Avrupa Minerals is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with MAG Silver and Avrupa Minerals

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

The idea behind MAG Silver Corp and Avrupa 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 Commodity Directory module to find actively traded commodities issued by global exchanges.