Correlation Between Silver One and MAG Silver

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

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

Diversification Opportunities for Silver One and MAG Silver

0.84

Correlation Coefficient

Silver One  MAG Silver

Very poor diversification

The 3 months correlation between Silver and MAG is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Silver One Resources 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 Silver One 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 Silver One Resources 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 Silver One i.e., Silver One and MAG Silver go up and down completely randomly.

Pair Corralation between Silver One and MAG Silver

Assuming the 90 days horizon Silver One Resources is expected to generate 2.52 times more return on investment than MAG Silver. However, Silver One is 2.52 times more volatile than MAG Silver Corp. It trades about 0.0 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.0 per unit of risk. If you would invest  16.00  in Silver One Resources on December 1, 2024 and sell it today you would lose (2.00) from holding Silver One Resources or give up 12.5% of portfolio value over 90 days.

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

Silver One Resources  vs.  MAG Silver Corp

Silver One Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver One Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Silver One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. Despite nearly stable basic indicators, MAG Silver is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Silver One and MAG Silver

The main advantage of trading using opposite Silver One and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver One 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 Silver One Resources 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.