Correlation Between First Majestic and Nickel Creek
Can any of the company-specific risk be diversified away by investing in both First Majestic and Nickel Creek 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 Nickel Creek 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 Nickel Creek Platinum, you can compare the effects of market volatilities on First Majestic and Nickel Creek 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 Nickel Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Nickel Creek.
Diversification Opportunities for First Majestic and Nickel Creek
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Nickel is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum 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 Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of First Majestic i.e., First Majestic and Nickel Creek go up and down completely randomly.
Pair Corralation between First Majestic and Nickel Creek
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Nickel Creek. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 5.94 times less risky than Nickel Creek. The stock trades about -0.01 of its potential returns per unit of risk. The Nickel Creek Platinum is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Nickel Creek Platinum on August 24, 2024 and sell it today you would lose (116.00) from holding Nickel Creek Platinum or give up 58.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Nickel Creek Platinum
Performance |
| Timeline |
| First Majestic Silver |
| Nickel Creek Platinum |
First Majestic and Nickel Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Nickel Creek
The main advantage of trading using opposite First Majestic and Nickel Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Nickel Creek 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 Nickel Creek will offset losses from the drop in Nickel Creek's long position.| First Majestic vs. High Liner Foods | First Majestic vs. Oculus VisionTech | First Majestic vs. MTY Food Group | First Majestic vs. Xtract One Technologies |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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