Correlation Between First Majestic and Palamina Corp
Can any of the company-specific risk be diversified away by investing in both First Majestic and Palamina Corp 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 Palamina Corp 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 Palamina Corp, you can compare the effects of market volatilities on First Majestic and Palamina Corp 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 Palamina Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Palamina Corp.
Diversification Opportunities for First Majestic and Palamina Corp
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Palamina is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Palamina Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palamina Corp 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 Palamina Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palamina Corp has no effect on the direction of First Majestic i.e., First Majestic and Palamina Corp go up and down completely randomly.
Pair Corralation between First Majestic and Palamina Corp
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.25 times more return on investment than Palamina Corp. However, First Majestic Silver is 4.07 times less risky than Palamina Corp. It trades about -0.29 of its potential returns per unit of risk. Palamina Corp is currently generating about -0.14 per unit of risk. If you would invest 1,028 in First Majestic Silver on September 1, 2024 and sell it today you would lose (160.00) from holding First Majestic Silver or give up 15.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Palamina Corp
Performance |
| Timeline |
| First Majestic Silver |
| Palamina Corp |
First Majestic and Palamina Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Palamina Corp
The main advantage of trading using opposite First Majestic and Palamina Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Palamina Corp 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 Palamina Corp will offset losses from the drop in Palamina Corp'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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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