Correlation Between MAG Silver and Cogeco Communications

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

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

Diversification Opportunities for MAG Silver and Cogeco Communications

0.37

Correlation Coefficient

MAG Silver  Cogeco Communications

Weak diversification

The 3 months correlation between MAG and Cogeco is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications 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 Corp are associated (or correlated) with Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of MAG Silver i.e., MAG Silver and Cogeco Communications go up and down completely randomly.

Pair Corralation between MAG Silver and Cogeco Communications

Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 1.94 times more return on investment than Cogeco Communications. However, MAG Silver is 1.94 times more volatile than Cogeco Communications. It trades about 0.06 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.08 per unit of risk. If you would invest  1,965  in MAG Silver Corp on September 17, 2024 and sell it today you would earn a total of  167.00  from holding MAG Silver Corp or generate 8.5% return on investment over 90 days.

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

MAG Silver Corp  vs.  Cogeco Communications

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.

Cogeco Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cogeco Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cogeco Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MAG Silver and Cogeco Communications

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

The idea behind MAG Silver Corp and Cogeco Communications 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.