Correlation Between First Majestic and Majestic Gold
Can any of the company-specific risk be diversified away by investing in both First Majestic and Majestic 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 Majestic 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 Majestic Gold Corp, you can compare the effects of market volatilities on First Majestic and Majestic 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 Majestic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Majestic Gold.
Diversification Opportunities for First Majestic and Majestic Gold
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Majestic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Majestic Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Majestic 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 Majestic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Majestic Gold Corp has no effect on the direction of First Majestic i.e., First Majestic and Majestic Gold go up and down completely randomly.
Pair Corralation between First Majestic and Majestic Gold
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Majestic Gold. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 1.71 times less risky than Majestic Gold. The stock trades about 0.0 of its potential returns per unit of risk. The Majestic Gold Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Majestic Gold Corp on September 3, 2024 and sell it today you would lose (2.00) from holding Majestic Gold Corp or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Majestic Gold Corp
Performance |
| Timeline |
| First Majestic Silver |
| Majestic Gold Corp |
First Majestic and Majestic Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Majestic Gold
The main advantage of trading using opposite First Majestic and Majestic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Majestic 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 Majestic Gold will offset losses from the drop in Majestic Gold's long position.| First Majestic vs. Precious Metals And | First Majestic vs. Thunderbird Entertainment Group | First Majestic vs. CNJ Capital Investments | First Majestic vs. Arbor Metals Corp |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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