Correlation Between First Majestic and Electra Battery
Can any of the company-specific risk be diversified away by investing in both First Majestic and Electra Battery 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 Electra Battery 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 Electra Battery Materials, you can compare the effects of market volatilities on First Majestic and Electra Battery 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 Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Electra Battery.
Diversification Opportunities for First Majestic and Electra Battery
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Electra is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery Materials 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 Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of First Majestic i.e., First Majestic and Electra Battery go up and down completely randomly.
Pair Corralation between First Majestic and Electra Battery
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.51 times more return on investment than Electra Battery. However, First Majestic Silver is 1.95 times less risky than Electra Battery. It trades about 0.0 of its potential returns per unit of risk. Electra Battery Materials is currently generating about -0.01 per unit of risk. If you would invest 1,204 in First Majestic Silver on August 27, 2024 and sell it today you would lose (323.00) from holding First Majestic Silver or give up 26.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Electra Battery Materials
Performance |
| Timeline |
| First Majestic Silver |
| Electra Battery Materials |
First Majestic and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Electra Battery
The main advantage of trading using opposite First Majestic and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Electra Battery 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 Electra Battery will offset losses from the drop in Electra Battery's long position.| First Majestic vs. Maple Leaf Foods | First Majestic vs. Goodfood Market Corp | First Majestic vs. Queens Road Capital | First Majestic vs. Quisitive Technology Solutions |
| Electra Battery vs. First Majestic Silver | Electra Battery vs. Ivanhoe Energy | Electra Battery vs. Orezone Gold Corp | Electra Battery 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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