Correlation Between Marimaca Copper and MAG Silver

Can any of the company-specific risk be diversified away by investing in both Marimaca Copper and MAG Silver 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 Marimaca Copper and MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marimaca Copper Corp and MAG Silver Corp, you can compare the effects of market volatilities on Marimaca Copper and MAG Silver 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 Marimaca Copper with a short position of MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimaca Copper and MAG Silver.

Diversification Opportunities for Marimaca Copper and MAG Silver

0.38

Correlation Coefficient

Marimaca Copper  MAG Silver

Weak diversification

The 3 months correlation between Marimaca and MAG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Marimaca Copper Corp and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG Silver Corp and Marimaca Copper 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 Marimaca Copper Corp are associated (or correlated) with MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of Marimaca Copper i.e., Marimaca Copper and MAG Silver go up and down completely randomly.

Pair Corralation between Marimaca Copper and MAG Silver

Assuming the 90 days trading horizon Marimaca Copper Corp is expected to generate 0.87 times more return on investment than MAG Silver. However, Marimaca Copper Corp is 1.15 times less risky than MAG Silver. It trades about 0.11 of its potential returns per unit of risk. MAG Silver Corp is currently generating about -0.13 per unit of risk. If you would invest  514.00  in Marimaca Copper Corp on December 4, 2024 and sell it today you would earn a total of  26.00  from holding Marimaca Copper Corp or generate 5.06% return on investment over 90 days.

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

Marimaca Copper Corp  vs.  MAG Silver Corp

Marimaca Copper Corp

Risk-Adjusted Performance

Modest

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

MAG Silver Corp

Risk-Adjusted Performance

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.

Pair Trading with Marimaca Copper and MAG Silver

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

The idea behind Marimaca Copper Corp and MAG Silver 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.