Correlation Between First Majestic and Flying Nickel
Can any of the company-specific risk be diversified away by investing in both First Majestic and Flying Nickel 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 Flying Nickel 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 Flying Nickel Mining, you can compare the effects of market volatilities on First Majestic and Flying Nickel 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 Flying Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Flying Nickel.
Diversification Opportunities for First Majestic and Flying Nickel
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Flying is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Flying Nickel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flying Nickel Mining 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 Flying Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flying Nickel Mining has no effect on the direction of First Majestic i.e., First Majestic and Flying Nickel go up and down completely randomly.
Pair Corralation between First Majestic and Flying Nickel
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Flying Nickel. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 6.34 times less risky than Flying Nickel. The stock trades about -0.29 of its potential returns per unit of risk. The Flying Nickel Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Flying Nickel Mining on September 1, 2024 and sell it today you would lose (0.50) from holding Flying Nickel Mining or give up 10.0% 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. Flying Nickel Mining
Performance |
| Timeline |
| First Majestic Silver |
| Flying Nickel Mining |
First Majestic and Flying Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Flying Nickel
The main advantage of trading using opposite First Majestic and Flying Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Flying Nickel 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 Flying Nickel will offset losses from the drop in Flying Nickel's long position.| First Majestic vs. Slate Grocery REIT | First Majestic vs. Toronto Dominion Bank | First Majestic vs. Enduro Metals Corp | First Majestic vs. Intact Financial Corp |
| Flying Nickel vs. Silver Elephant Mining | Flying Nickel vs. Power Nickel | Flying Nickel vs. FPX Nickel Corp | Flying Nickel vs. Nickel Creek Platinum |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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