Correlation Between First Majestic and Lumina Gold
Can any of the company-specific risk be diversified away by investing in both First Majestic and Lumina Gold 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 Lumina Gold 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 Lumina Gold Corp, you can compare the effects of market volatilities on First Majestic and Lumina Gold 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 Lumina Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Lumina Gold.
Diversification Opportunities for First Majestic and Lumina Gold
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Lumina is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Lumina Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumina Gold 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 Lumina Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumina Gold Corp has no effect on the direction of First Majestic i.e., First Majestic and Lumina Gold go up and down completely randomly.
Pair Corralation between First Majestic and Lumina Gold
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Lumina Gold. In addition to that, First Majestic is 1.08 times more volatile than Lumina Gold Corp. It trades about -0.31 of its total potential returns per unit of risk. Lumina Gold Corp is currently generating about -0.28 per unit of volatility. If you would invest 58.00 in Lumina Gold Corp on August 29, 2024 and sell it today you would lose (9.00) from holding Lumina Gold Corp or give up 15.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Lumina Gold Corp
Performance |
| Timeline |
| First Majestic Silver |
| Lumina Gold Corp |
First Majestic and Lumina Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Lumina Gold
The main advantage of trading using opposite First Majestic and Lumina Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Lumina Gold 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 Lumina Gold will offset losses from the drop in Lumina Gold'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 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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