Correlation Between MAG Silver and E L

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

Diversification Opportunities for MAG Silver and E L

0.11

Correlation Coefficient

MAG Silver  E L

Average diversification

The 3 months correlation between MAG and ELF-PG is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and E L Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial 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 E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of MAG Silver i.e., MAG Silver and E L go up and down completely randomly.

Pair Corralation between MAG Silver and E L

Assuming the 90 days trading horizon MAG Silver Corp is expected to under-perform the E L. In addition to that, MAG Silver is 2.57 times more volatile than E L Financial Corp. It trades about -0.15 of its total potential returns per unit of risk. E L Financial Corp is currently generating about 0.07 per unit of volatility. If you would invest  1,970  in E L Financial Corp on October 11, 2024 and sell it today you would earn a total of  23.00  from holding E L Financial Corp or generate 1.17% return on investment over 90 days.

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

MAG Silver Corp  vs.  E L Financial Corp

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 very healthy technical and fundamental indicators, MAG Silver is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

E L Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E L Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, E L is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MAG Silver and E L

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

The idea behind MAG Silver Corp and E L Financial 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.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.