Correlation Between First Majestic and Grande Portage
Can any of the company-specific risk be diversified away by investing in both First Majestic and Grande Portage 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 Grande Portage 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 Grande Portage Resources, you can compare the effects of market volatilities on First Majestic and Grande Portage 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 Grande Portage. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Grande Portage.
Diversification Opportunities for First Majestic and Grande Portage
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Grande is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Grande Portage Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Portage 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 Grande Portage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Portage Resources has no effect on the direction of First Majestic i.e., First Majestic and Grande Portage go up and down completely randomly.
Pair Corralation between First Majestic and Grande Portage
Assuming the 90 days horizon First Majestic is expected to generate 3.28 times less return on investment than Grande Portage. But when comparing it to its historical volatility, First Majestic Silver is 1.97 times less risky than Grande Portage. It trades about 0.02 of its potential returns per unit of risk. Grande Portage Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Grande Portage Resources on August 26, 2024 and sell it today you would earn a total of 3.00 from holding Grande Portage Resources or generate 15.79% 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. Grande Portage Resources
Performance |
| Timeline |
| First Majestic Silver |
| Grande Portage Resources |
First Majestic and Grande Portage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Grande Portage
The main advantage of trading using opposite First Majestic and Grande Portage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Grande Portage 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 Grande Portage will offset losses from the drop in Grande Portage's long position.| First Majestic vs. Canadian General Investments | First Majestic vs. 2028 Investment Grade | First Majestic vs. Brookfield Investments | First Majestic vs. Upstart Investments |
| Grande Portage vs. First Majestic Silver | Grande Portage vs. Ivanhoe Energy | Grande Portage vs. Orezone Gold Corp | Grande Portage 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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