Correlation Between Canadian General and MAG Silver

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

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

Diversification Opportunities for Canadian General and MAG Silver

0.56

Correlation Coefficient

Canadian General  MAG Silver

Very weak diversification

The 3 months correlation between Canadian and MAG is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments 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 Canadian General 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 Canadian General Investments 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 Canadian General i.e., Canadian General and MAG Silver go up and down completely randomly.

Pair Corralation between Canadian General and MAG Silver

Assuming the 90 days trading horizon Canadian General is expected to generate 1.58 times less return on investment than MAG Silver. But when comparing it to its historical volatility, Canadian General Investments is 2.53 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 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,959  in MAG Silver Corp on September 14, 2024 and sell it today you would earn a total of  173.00  from holding MAG Silver Corp or generate 8.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Canadian General Investments  vs.  MAG Silver Corp

Canadian General Inv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Canadian General may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MAG Silver Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, MAG Silver may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Canadian General and MAG Silver

The main advantage of trading using opposite Canadian General and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General 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 Canadian General Investments 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.