Correlation Between First Majestic and Eros Resources
Can any of the company-specific risk be diversified away by investing in both First Majestic and Eros 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 Eros 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 Eros Resources Corp, you can compare the effects of market volatilities on First Majestic and Eros 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 Eros Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Eros Resources.
Diversification Opportunities for First Majestic and Eros Resources
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Eros is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Eros Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros Resources Corp 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 Eros Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros Resources Corp has no effect on the direction of First Majestic i.e., First Majestic and Eros Resources go up and down completely randomly.
Pair Corralation between First Majestic and Eros Resources
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Eros Resources. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 1.38 times less risky than Eros Resources. The stock trades about 0.0 of its potential returns per unit of risk. The Eros Resources Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Eros Resources Corp on August 30, 2024 and sell it today you would lose (1.50) from holding Eros Resources Corp or give up 27.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Eros Resources Corp
Performance |
| Timeline |
| First Majestic Silver |
| Eros Resources Corp |
First Majestic and Eros Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Eros Resources
The main advantage of trading using opposite First Majestic and Eros Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Eros 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 Eros Resources will offset losses from the drop in Eros Resources' 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 |
| Eros Resources vs. First Majestic Silver | Eros Resources vs. Ivanhoe Energy | Eros Resources vs. Orezone Gold Corp | Eros Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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