Correlation Between MAG Silver and Constellium

Can any of the company-specific risk be diversified away by investing in both MAG Silver and Constellium 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 Constellium 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 Constellium Nv, you can compare the effects of market volatilities on MAG Silver and Constellium 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 Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG Silver and Constellium.

Diversification Opportunities for MAG Silver and Constellium

-0.72

Correlation Coefficient

MAG Silver  Constellium

Pay attention - limited upside

The 3 months correlation between MAG and Constellium is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv 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 Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of MAG Silver i.e., MAG Silver and Constellium go up and down completely randomly.

Pair Corralation between MAG Silver and Constellium

Considering the 90-day investment horizon MAG Silver Corp is expected to generate 0.67 times more return on investment than Constellium. However, MAG Silver Corp is 1.49 times less risky than Constellium. It trades about 0.1 of its potential returns per unit of risk. Constellium Nv is currently generating about -0.09 per unit of risk. If you would invest  1,304  in MAG Silver Corp on August 30, 2024 and sell it today you would earn a total of  231.00  from holding MAG Silver Corp or generate 17.71% return on investment over 90 days.

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

MAG Silver Corp  vs.  Constellium Nv

MAG Silver Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MAG Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Constellium Nv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellium Nv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MAG Silver and Constellium

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

The idea behind MAG Silver Corp and Constellium Nv 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..