Correlation Between First Majestic and Black Widow
Can any of the company-specific risk be diversified away by investing in both First Majestic and Black Widow 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 Widow 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 Widow Resources, you can compare the effects of market volatilities on First Majestic and Black Widow 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 Widow. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Black Widow.
Diversification Opportunities for First Majestic and Black Widow
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Black is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Black Widow Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Widow 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 Black Widow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Widow Resources has no effect on the direction of First Majestic i.e., First Majestic and Black Widow go up and down completely randomly.
Pair Corralation between First Majestic and Black Widow
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Black Widow. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 2.75 times less risky than Black Widow. The stock trades about 0.0 of its potential returns per unit of risk. The Black Widow Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Black Widow Resources on August 29, 2024 and sell it today you would lose (2.50) from holding Black Widow Resources or give up 71.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Black Widow Resources
Performance |
| Timeline |
| First Majestic Silver |
| Black Widow Resources |
First Majestic and Black Widow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Black Widow
The main advantage of trading using opposite First Majestic and Black Widow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Black Widow 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 Widow will offset losses from the drop in Black Widow's long position.| First Majestic vs. Talon Metals Corp | First Majestic vs. Champion Gaming Group | First Majestic vs. SalesforceCom CDR | First Majestic vs. Gfl Environmental Holdings |
| Black Widow vs. First Majestic Silver | Black Widow vs. Ivanhoe Energy | Black Widow vs. Orezone Gold Corp | Black Widow vs. Faraday Copper Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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