Correlation Between MAG Silver and Wheaton Precious

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

Diversification Opportunities for MAG Silver and Wheaton Precious

0.78

Correlation Coefficient

MAG Silver  Wheaton Precious

Poor diversification

The 3 months correlation between MAG and Wheaton is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver Corp and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of MAG Silver i.e., MAG Silver and Wheaton Precious go up and down completely randomly.

Pair Corralation between MAG Silver and Wheaton Precious

Assuming the 90 days trading horizon MAG Silver Corp is expected to generate 0.97 times more return on investment than Wheaton Precious. However, MAG Silver Corp is 1.03 times less risky than Wheaton Precious. It trades about 0.25 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.11 per unit of risk. If you would invest  2,130  in MAG Silver Corp on April 25, 2025 and sell it today you would earn a total of  832.00  from holding MAG Silver Corp or generate 39.06% return on investment over 90 days.

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

MAG Silver Corp  vs.  Wheaton Precious Metals

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 20 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, MAG Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Wheaton Precious Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Wheaton Precious displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAG Silver and Wheaton Precious

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

The idea behind MAG Silver Corp and Wheaton Precious Metals 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.