Correlation Between First Majestic and Magnum Goldcorp
Can any of the company-specific risk be diversified away by investing in both First Majestic and Magnum Goldcorp 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 Magnum Goldcorp 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 Magnum Goldcorp, you can compare the effects of market volatilities on First Majestic and Magnum Goldcorp 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 Magnum Goldcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Magnum Goldcorp.
Diversification Opportunities for First Majestic and Magnum Goldcorp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Magnum is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Magnum Goldcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnum Goldcorp 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 Magnum Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnum Goldcorp has no effect on the direction of First Majestic i.e., First Majestic and Magnum Goldcorp go up and down completely randomly.
Pair Corralation between First Majestic and Magnum Goldcorp
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Magnum Goldcorp. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 7.49 times less risky than Magnum Goldcorp. The stock trades about -0.42 of its potential returns per unit of risk. The Magnum Goldcorp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Magnum Goldcorp on August 30, 2024 and sell it today you would lose (3.00) from holding Magnum Goldcorp or give up 37.5% 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. Magnum Goldcorp
Performance |
| Timeline |
| First Majestic Silver |
| Magnum Goldcorp |
First Majestic and Magnum Goldcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Magnum Goldcorp
The main advantage of trading using opposite First Majestic and Magnum Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Magnum Goldcorp 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 Magnum Goldcorp will offset losses from the drop in Magnum Goldcorp's 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 |
| Magnum Goldcorp vs. First Majestic Silver | Magnum Goldcorp vs. Ivanhoe Energy | Magnum Goldcorp vs. Orezone Gold Corp | Magnum Goldcorp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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