Correlation Between First Majestic and Magna Terra
Can any of the company-specific risk be diversified away by investing in both First Majestic and Magna Terra 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 Magna Terra 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 Magna Terra Minerals, you can compare the effects of market volatilities on First Majestic and Magna Terra 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 Magna Terra. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Magna Terra.
Diversification Opportunities for First Majestic and Magna Terra
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Magna is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Magna Terra Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Terra Minerals 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 Magna Terra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Terra Minerals has no effect on the direction of First Majestic i.e., First Majestic and Magna Terra go up and down completely randomly.
Pair Corralation between First Majestic and Magna Terra
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Magna Terra. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 9.62 times less risky than Magna Terra. The stock trades about -0.29 of its potential returns per unit of risk. The Magna Terra Minerals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Magna Terra Minerals on September 1, 2024 and sell it today you would lose (0.50) from holding Magna Terra Minerals or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Magna Terra Minerals
Performance |
| Timeline |
| First Majestic Silver |
| Magna Terra Minerals |
First Majestic and Magna Terra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Magna Terra
The main advantage of trading using opposite First Majestic and Magna Terra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Magna Terra 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 Magna Terra will offset losses from the drop in Magna Terra's long position.| First Majestic vs. Slate Grocery REIT | First Majestic vs. Toronto Dominion Bank | First Majestic vs. Enduro Metals Corp | First Majestic vs. Intact Financial Corp |
| Magna Terra vs. Kiplin Metals | Magna Terra vs. Pure Energy Minerals | Magna Terra vs. Noram Lithium Corp | Magna Terra vs. Minnova 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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