Correlation Between MAG Silver and Renoworks Software

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

Diversification Opportunities for MAG Silver and Renoworks Software

0.12

Correlation Coefficient

MAG Silver  Renoworks Software

Average diversification

The 3 months correlation between MAG and Renoworks is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Renoworks Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renoworks Software 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 Renoworks Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renoworks Software has no effect on the direction of MAG Silver i.e., MAG Silver and Renoworks Software go up and down completely randomly.

Pair Corralation between MAG Silver and Renoworks Software

Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 0.89 times more return on investment than Renoworks Software. However, MAG Silver Corp is 1.12 times less risky than Renoworks Software. It trades about 0.09 of its potential returns per unit of risk. Renoworks Software is currently generating about -0.06 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 Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

MAG Silver Corp  vs.  Renoworks Software

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.

Renoworks Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Renoworks Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with MAG Silver and Renoworks Software

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

The idea behind MAG Silver Corp and Renoworks Software 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.