Correlation Between Nicola Mining and MAG Silver

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

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

Diversification Opportunities for Nicola Mining and MAG Silver

-0.66

Correlation Coefficient

Nicola Mining  MAG Silver

Excellent diversification

The 3 months correlation between Nicola and MAG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining 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 Nicola 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 Nicola Mining 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 Nicola Mining i.e., Nicola Mining and MAG Silver go up and down completely randomly.

Pair Corralation between Nicola Mining and MAG Silver

Assuming the 90 days horizon Nicola Mining is expected to under-perform the MAG Silver. In addition to that, Nicola Mining is 1.56 times more volatile than MAG Silver Corp. It trades about -0.07 of its total potential returns per unit of risk. MAG Silver Corp is currently generating about 0.17 per unit of volatility. If you would invest  1,641  in MAG Silver Corp on September 4, 2024 and sell it today you would earn a total of  512.00  from holding MAG Silver Corp or generate 31.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Nicola Mining  vs.  MAG Silver Corp

Nicola Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nicola Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 Nicola Mining and MAG Silver

The main advantage of trading using opposite Nicola Mining and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicola Mining 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 Nicola Mining 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.