Correlation Between American Buildings and MAG Silver

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

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

Diversification Opportunities for American Buildings and MAG Silver

0.0

Correlation Coefficient

American Buildings  MAG Silver

Pay attention - limited upside

The 3 months correlation between American and MAG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Buildings Co 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 American Buildings 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 American Buildings Co 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 American Buildings i.e., American Buildings and MAG Silver go up and down completely randomly.

Pair Corralation between American Buildings and MAG Silver

If you would invest  1,489  in MAG Silver Corp on January 25, 2024 and sell it today you would lose (276.00) from holding MAG Silver Corp or give up 18.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Buildings Co  vs.  MAG Silver Corp

American Buildings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Buildings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, American Buildings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

MAG Silver Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 11 (%) 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.

Pair Trading with American Buildings and MAG Silver

The main advantage of trading using opposite American Buildings and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Buildings 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 American Buildings Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.