Correlation Between MAG Silver and Verizon Communications

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

Diversification Opportunities for MAG Silver and Verizon Communications

-0.47

Correlation Coefficient

MAG Silver  Verizon Communications

Very good diversification

The 3 months correlation between MAG and Verizon is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Verizon Communications CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of MAG Silver i.e., MAG Silver and Verizon Communications go up and down completely randomly.

Pair Corralation between MAG Silver and Verizon Communications

Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 1.89 times more return on investment than Verizon Communications. However, MAG Silver is 1.89 times more volatile than Verizon Communications CDR. It trades about 0.06 of its potential returns per unit of risk. Verizon Communications CDR is currently generating about 0.05 per unit of risk. If you would invest  1,565  in MAG Silver Corp on April 20, 2025 and sell it today you would earn a total of  1,309  from holding MAG Silver Corp or generate 83.64% return on investment over 90 days.

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

MAG Silver Corp  vs.  Verizon Communications CDR

MAG Silver Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, MAG Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Verizon Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Verizon Communications CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Verizon 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 Verizon Communications

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

The idea behind MAG Silver Corp and Verizon Communications CDR 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.