Correlation Between DRI Healthcare and MAG Silver

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

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

Diversification Opportunities for DRI Healthcare and MAG Silver

0.64

Correlation Coefficient

DRI Healthcare  MAG Silver

Poor diversification

The 3 months correlation between DRI and MAG is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding DRI Healthcare Trust 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 DRI Healthcare 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 DRI Healthcare Trust 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 DRI Healthcare i.e., DRI Healthcare and MAG Silver go up and down completely randomly.

Pair Corralation between DRI Healthcare and MAG Silver

Assuming the 90 days trading horizon DRI Healthcare Trust is expected to generate 0.98 times more return on investment than MAG Silver. However, DRI Healthcare Trust is 1.02 times less risky than MAG Silver. It trades about 0.06 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.01 per unit of risk. If you would invest  509.00  in DRI Healthcare Trust on September 3, 2024 and sell it today you would earn a total of  406.00  from holding DRI Healthcare Trust or generate 79.76% return on investment over 90 days.

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

DRI Healthcare Trust  vs.  MAG Silver Corp

DRI Healthcare Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DRI Healthcare Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, DRI Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MAG Silver Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, MAG Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DRI Healthcare and MAG Silver

The main advantage of trading using opposite DRI Healthcare and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRI Healthcare 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 DRI Healthcare Trust 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.