Correlation Between MAG Silver and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both MAG Silver and Capstone Mining 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 Capstone Mining 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 Capstone Mining Corp, you can compare the effects of market volatilities on MAG Silver and Capstone Mining 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 Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Capstone Mining.
Diversification Opportunities for MAG Silver and Capstone Mining
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between MAG and Capstone is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp 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 Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of MAG Silver i.e., MAG Silver and Capstone Mining go up and down completely randomly.
Pair Corralation between MAG Silver and Capstone Mining
Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 0.96 times more return on investment than Capstone Mining. However, MAG Silver Corp is 1.05 times less risky than Capstone Mining. It trades about 0.0 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about -0.09 per unit of risk. If you would invest 2,026 in MAG Silver Corp on September 24, 2024 and sell it today you would lose (39.00) from holding MAG Silver Corp or give up 1.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
MAG Silver Corp vs. Capstone Mining Corp
Performance |
Timeline |
MAG Silver Corp |
Capstone Mining Corp |
MAG Silver and Capstone Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MAG Silver and Capstone Mining
The main advantage of trading using opposite MAG Silver and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver position performs unexpectedly, Capstone Mining 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 Capstone Mining will offset losses from the drop in Capstone Mining's long position.The idea behind MAG Silver Corp and Capstone Mining 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.Capstone Mining vs. Cogeco Communications | Capstone Mining vs. Orbit Garant Drilling | Capstone Mining vs. Slate Grocery REIT | Capstone Mining vs. Canlan Ice Sports |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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