Correlation Between Magna Mining and Golden Minerals

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Can any of the company-specific risk be diversified away by investing in both Magna Mining and Golden Minerals 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 Magna Mining and Golden Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna Mining and Golden Minerals, you can compare the effects of market volatilities on Magna Mining and Golden Minerals 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 Magna Mining with a short position of Golden Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna Mining and Golden Minerals.

Diversification Opportunities for Magna Mining and Golden Minerals

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Magna and Golden is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Magna Mining and Golden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Minerals and Magna Mining 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 Magna Mining are associated (or correlated) with Golden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Minerals has no effect on the direction of Magna Mining i.e., Magna Mining and Golden Minerals go up and down completely randomly.

Pair Corralation between Magna Mining and Golden Minerals

Assuming the 90 days trading horizon Magna Mining is expected to generate 0.51 times more return on investment than Golden Minerals. However, Magna Mining is 1.97 times less risky than Golden Minerals. It trades about 0.13 of its potential returns per unit of risk. Golden Minerals is currently generating about -0.37 per unit of risk. If you would invest  118.00  in Magna Mining on September 23, 2024 and sell it today you would earn a total of  24.00  from holding Magna Mining or generate 20.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Magna Mining  vs.  Golden Minerals

 Performance 
       Timeline  
Magna Mining 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Magna Mining showed solid returns over the last few months and may actually be approaching a breakup point.
Golden Minerals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Golden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Magna Mining and Golden Minerals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Magna Mining and Golden Minerals

The main advantage of trading using opposite Magna Mining and Golden Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna Mining position performs unexpectedly, Golden Minerals 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 Golden Minerals will offset losses from the drop in Golden Minerals' long position.
The idea behind Magna Mining and Golden Minerals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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