Correlation Between MAG Silver and Bald Eagle

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

Diversification Opportunities for MAG Silver and Bald Eagle

0.34

Correlation Coefficient

MAG Silver  Bald Eagle

Weak diversification

The 3 months correlation between MAG and Bald is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Bald Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bald Eagle Gold 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 Bald Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bald Eagle Gold has no effect on the direction of MAG Silver i.e., MAG Silver and Bald Eagle go up and down completely randomly.

Pair Corralation between MAG Silver and Bald Eagle

Considering the 90-day investment horizon MAG Silver is expected to generate 1.36 times less return on investment than Bald Eagle. But when comparing it to its historical volatility, MAG Silver Corp is 1.28 times less risky than Bald Eagle. It trades about 0.09 of its potential returns per unit of risk. Bald Eagle Gold is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Bald Eagle Gold on December 27, 2024 and sell it today you would earn a total of  9.00  from holding Bald Eagle Gold or generate 22.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

MAG Silver Corp  vs.  Bald Eagle Gold

MAG Silver Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, MAG Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Bald Eagle Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bald Eagle Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Bald Eagle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAG Silver and Bald Eagle

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

The idea behind MAG Silver Corp and Bald Eagle Gold 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.