Correlation Between First Majestic and Namibia Critical
Can any of the company-specific risk be diversified away by investing in both First Majestic and Namibia Critical 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 Namibia Critical 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 Namibia Critical Metals, you can compare the effects of market volatilities on First Majestic and Namibia Critical 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 Namibia Critical. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Namibia Critical.
Diversification Opportunities for First Majestic and Namibia Critical
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Namibia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Namibia Critical Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namibia Critical Metals 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 Namibia Critical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namibia Critical Metals has no effect on the direction of First Majestic i.e., First Majestic and Namibia Critical go up and down completely randomly.
Pair Corralation between First Majestic and Namibia Critical
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.43 times more return on investment than Namibia Critical. However, First Majestic Silver is 2.35 times less risky than Namibia Critical. It trades about 0.1 of its potential returns per unit of risk. Namibia Critical Metals is currently generating about -0.05 per unit of risk. If you would invest 785.00 in First Majestic Silver on September 12, 2024 and sell it today you would earn a total of 161.00 from holding First Majestic Silver or generate 20.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
First Majestic Silver vs. Namibia Critical Metals
Performance |
| Timeline |
| First Majestic Silver |
| Namibia Critical Metals |
First Majestic and Namibia Critical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Namibia Critical
The main advantage of trading using opposite First Majestic and Namibia Critical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Namibia Critical 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 Namibia Critical will offset losses from the drop in Namibia Critical's long position.| First Majestic vs. Ivanhoe Energy | First Majestic vs. Orezone Gold Corp | First Majestic vs. Faraday Copper Corp |
| Namibia Critical vs. Foraco International SA | Namibia Critical vs. Geodrill Limited | Namibia Critical vs. Major Drilling Group | Namibia Critical vs. Bri Chem 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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