Correlation Between MAG SILVER and Strategic Investments

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

By analyzing existing cross correlation between MAG SILVER and Strategic Investments AS, you can compare the effects of market volatilities on MAG SILVER and Strategic Investments 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 Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG SILVER and Strategic Investments.

Diversification Opportunities for MAG SILVER and Strategic Investments

0.08

Correlation Coefficient

MAG SILVER  Strategic Investments

Significant diversification

The 3 months correlation between MAG and Strategic is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding MAG SILVER and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments 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 are associated (or correlated) with Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of MAG SILVER i.e., MAG SILVER and Strategic Investments go up and down completely randomly.

Pair Corralation between MAG SILVER and Strategic Investments

Assuming the 90 days trading horizon MAG SILVER is expected to generate 0.37 times more return on investment than Strategic Investments. However, MAG SILVER is 2.68 times less risky than Strategic Investments. It trades about 0.03 of its potential returns per unit of risk. Strategic Investments AS is currently generating about -0.09 per unit of risk. If you would invest  1,357  in MAG SILVER on October 8, 2024 and sell it today you would earn a total of  38.00  from holding MAG SILVER or generate 2.8% return on investment over 90 days.

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

MAG SILVER  vs.  Strategic Investments AS

MAG SILVER

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MAG SILVER are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MAG SILVER is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Strategic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MAG SILVER and Strategic Investments

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

The idea behind MAG SILVER and Strategic Investments AS 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.