Correlation Between First Majestic and Black Iron
Can any of the company-specific risk be diversified away by investing in both First Majestic and Black Iron 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 Black Iron 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 Black Iron, you can compare the effects of market volatilities on First Majestic and Black Iron 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 Black Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Black Iron.
Diversification Opportunities for First Majestic and Black Iron
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Black is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Black Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Iron 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 Black Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Iron has no effect on the direction of First Majestic i.e., First Majestic and Black Iron go up and down completely randomly.
Pair Corralation between First Majestic and Black Iron
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Black Iron. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 3.01 times less risky than Black Iron. The stock trades about -0.03 of its potential returns per unit of risk. The Black Iron is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Black Iron on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Black Iron or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Black Iron
Performance |
| Timeline |
| First Majestic Silver |
| Black Iron |
First Majestic and Black Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Black Iron
The main advantage of trading using opposite First Majestic and Black Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Black Iron 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 Black Iron will offset losses from the drop in Black Iron's long position.| First Majestic vs. Contagious Gaming | First Majestic vs. WELL Health Technologies | First Majestic vs. Champion Gaming Group | First Majestic vs. Advent Wireless |
| Black Iron vs. Northcliff Resources | Black Iron vs. St Augustine Gold | Black Iron vs. Mammoth Resources Corp | Black Iron vs. Black Widow Resources |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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