Correlation Between First Majestic and O3 Mining
Can any of the company-specific risk be diversified away by investing in both First Majestic and O3 Mining 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 O3 Mining 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 O3 Mining, you can compare the effects of market volatilities on First Majestic and O3 Mining 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 O3 Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and O3 Mining.
Diversification Opportunities for First Majestic and O3 Mining
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and OIII is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and O3 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O3 Mining 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 O3 Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O3 Mining has no effect on the direction of First Majestic i.e., First Majestic and O3 Mining go up and down completely randomly.
Pair Corralation between First Majestic and O3 Mining
Assuming the 90 days horizon First Majestic Silver is expected to generate 1.22 times more return on investment than O3 Mining. However, First Majestic is 1.22 times more volatile than O3 Mining. It trades about 0.01 of its potential returns per unit of risk. O3 Mining is currently generating about -0.03 per unit of risk. If you would invest 943.00 in First Majestic Silver on August 26, 2024 and sell it today you would lose (62.00) from holding First Majestic Silver or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. O3 Mining
Performance |
| Timeline |
| First Majestic Silver |
| O3 Mining |
First Majestic and O3 Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and O3 Mining
The main advantage of trading using opposite First Majestic and O3 Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, O3 Mining 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 O3 Mining will offset losses from the drop in O3 Mining's long position.| First Majestic vs. Canadian General Investments | First Majestic vs. 2028 Investment Grade | First Majestic vs. Brookfield Investments | First Majestic vs. Upstart Investments |
| O3 Mining vs. First Majestic Silver | O3 Mining vs. Ivanhoe Energy | O3 Mining vs. Orezone Gold Corp | O3 Mining vs. Faraday Copper 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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