Correlation Between First Majestic and GreenFirst Forest
Can any of the company-specific risk be diversified away by investing in both First Majestic and GreenFirst Forest 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 GreenFirst Forest 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 GreenFirst Forest Products, you can compare the effects of market volatilities on First Majestic and GreenFirst Forest 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 GreenFirst Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and GreenFirst Forest.
Diversification Opportunities for First Majestic and GreenFirst Forest
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and GreenFirst is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and GreenFirst Forest Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenFirst Forest 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 GreenFirst Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenFirst Forest has no effect on the direction of First Majestic i.e., First Majestic and GreenFirst Forest go up and down completely randomly.
Pair Corralation between First Majestic and GreenFirst Forest
Assuming the 90 days horizon First Majestic is expected to generate 3.66 times less return on investment than GreenFirst Forest. But when comparing it to its historical volatility, First Majestic Silver is 1.45 times less risky than GreenFirst Forest. It trades about 0.08 of its potential returns per unit of risk. GreenFirst Forest Products is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 302.00 in GreenFirst Forest Products on August 28, 2024 and sell it today you would earn a total of 258.00 from holding GreenFirst Forest Products or generate 85.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. GreenFirst Forest Products
Performance |
| Timeline |
| First Majestic Silver |
| GreenFirst Forest |
First Majestic and GreenFirst Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and GreenFirst Forest
The main advantage of trading using opposite First Majestic and GreenFirst Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, GreenFirst Forest 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 GreenFirst Forest will offset losses from the drop in GreenFirst Forest's long position.| First Majestic vs. 2028 Investment Grade | First Majestic vs. Western Investment | First Majestic vs. Atrium Mortgage Investment | First Majestic vs. Air Canada |
| GreenFirst Forest vs. Conifex Timber | GreenFirst Forest vs. Itafos Corp | GreenFirst Forest vs. GreenFirst Forest Products | GreenFirst Forest vs. BluMetric Environmental |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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