Correlation Between Lundin Mining and First Majestic

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

Diversification Opportunities for Lundin Mining and First Majestic

LundinFirstDiversified AwayLundinFirstDiversified Away100%
0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Lundin and First is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Lundin 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 Lundin Mining Corp are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Lundin Mining i.e., Lundin Mining and First Majestic go up and down completely randomly.

Pair Corralation between Lundin Mining and First Majestic

Assuming the 90 days trading horizon Lundin Mining Corp is expected to under-perform the First Majestic. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Mining Corp is 1.4 times less risky than First Majestic. The stock trades about -0.06 of its potential returns per unit of risk. The First Majestic Silver is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  776.00  in First Majestic Silver on November 27, 2024 and sell it today you would earn a total of  8.00  from holding First Majestic Silver or generate 1.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Lundin Mining Corp  vs.  First Majestic Silver

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-505
JavaScript chart by amCharts 3.21.150RQ9 0QYC
       Timeline  
Lundin Mining Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Lundin Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7580859095100105110
First Majestic Silver 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7.588.599.5

Lundin Mining and First Majestic Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.86-2.89-1.92-0.950.00.831.682.523.36 0.030.040.050.060.07
JavaScript chart by amCharts 3.21.150RQ9 0QYC
       Returns  

Pair Trading with Lundin Mining and First Majestic

The main advantage of trading using opposite Lundin Mining and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.
The idea behind Lundin Mining Corp and First Majestic Silver 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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