Correlation Between Magna Mining and American Rare
Can any of the company-specific risk be diversified away by investing in both Magna Mining and American Rare 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 Magna Mining and American Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna Mining and American Rare Earths, you can compare the effects of market volatilities on Magna Mining and American Rare 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 Magna Mining with a short position of American Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna Mining and American Rare.
Diversification Opportunities for Magna Mining and American Rare
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magna and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Magna Mining and American Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Rare Earths and Magna Mining 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 Magna Mining are associated (or correlated) with American Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Rare Earths has no effect on the direction of Magna Mining i.e., Magna Mining and American Rare go up and down completely randomly.
Pair Corralation between Magna Mining and American Rare
Assuming the 90 days horizon Magna Mining is expected to generate 1.24 times more return on investment than American Rare. However, Magna Mining is 1.24 times more volatile than American Rare Earths. It trades about 0.08 of its potential returns per unit of risk. American Rare Earths is currently generating about 0.07 per unit of risk. If you would invest 95.00 in Magna Mining on December 29, 2024 and sell it today you would earn a total of 16.00 from holding Magna Mining or generate 16.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.39% |
Values | Daily Returns |
Magna Mining vs. American Rare Earths
Performance |
Timeline |
Magna Mining |
American Rare Earths |
Magna Mining and American Rare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magna Mining and American Rare
The main advantage of trading using opposite Magna Mining and American Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna Mining position performs unexpectedly, American Rare 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 American Rare will offset losses from the drop in American Rare's long position.Magna Mining vs. Emerita Resources Corp | Magna Mining vs. Stone Gold | Magna Mining vs. BCM Resources | Magna Mining vs. Fathom Nickel |
American Rare vs. Aurelia Metals Limited | American Rare vs. Artemis Resources | American Rare vs. Ascendant Resources | American Rare vs. Azimut Exploration |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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