Correlation Between First Majestic and North Arrow
Can any of the company-specific risk be diversified away by investing in both First Majestic and North Arrow 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 North Arrow 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 North Arrow Minerals, you can compare the effects of market volatilities on First Majestic and North Arrow 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 North Arrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and North Arrow.
Diversification Opportunities for First Majestic and North Arrow
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and North is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and North Arrow Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Arrow 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 North Arrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Arrow Minerals has no effect on the direction of First Majestic i.e., First Majestic and North Arrow go up and down completely randomly.
Pair Corralation between First Majestic and North Arrow
Assuming the 90 days horizon First Majestic is expected to generate 4.11 times less return on investment than North Arrow. But when comparing it to its historical volatility, First Majestic Silver is 3.54 times less risky than North Arrow. It trades about 0.03 of its potential returns per unit of risk. North Arrow Minerals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 60.00 in North Arrow Minerals on September 1, 2024 and sell it today you would lose (42.00) from holding North Arrow Minerals or give up 70.0% 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. North Arrow Minerals
Performance |
| Timeline |
| First Majestic Silver |
| North Arrow Minerals |
First Majestic and North Arrow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and North Arrow
The main advantage of trading using opposite First Majestic and North Arrow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, North Arrow 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 North Arrow will offset losses from the drop in North Arrow'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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