Correlation Between First Majestic and Ascot Resources
Can any of the company-specific risk be diversified away by investing in both First Majestic and Ascot Resources 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 First Majestic and Ascot Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Majestic Silver and Ascot Resources, you can compare the effects of market volatilities on First Majestic and Ascot Resources 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 First Majestic with a short position of Ascot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Ascot Resources.
Diversification Opportunities for First Majestic and Ascot Resources
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Ascot is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources and First Majestic 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 First Majestic Silver are associated (or correlated) with Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of First Majestic i.e., First Majestic and Ascot Resources go up and down completely randomly.
Pair Corralation between First Majestic and Ascot Resources
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.37 times more return on investment than Ascot Resources. However, First Majestic Silver is 2.67 times less risky than Ascot Resources. It trades about 0.09 of its potential returns per unit of risk. Ascot Resources is currently generating about -0.02 per unit of risk. If you would invest 864.00 in First Majestic Silver on September 12, 2024 and sell it today you would earn a total of 44.00 from holding First Majestic Silver or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Majestic Silver vs. Ascot Resources
Performance |
| Timeline |
| First Majestic Silver |
| Ascot Resources |
First Majestic and Ascot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Ascot Resources
The main advantage of trading using opposite First Majestic and Ascot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Ascot Resources 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 Ascot Resources will offset losses from the drop in Ascot Resources' long position.| First Majestic vs. Wishpond Technologies | First Majestic vs. 2028 Investment Grade | First Majestic vs. Tree Island Steel | First Majestic vs. Advent Wireless |
| Ascot Resources vs. Ressources Minieres Radisson | Ascot Resources vs. Galantas Gold Corp | Ascot Resources vs. Red Pine Exploration | Ascot Resources vs. Kore Mining |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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