Correlation Between First Majestic and Power Nickel
Can any of the company-specific risk be diversified away by investing in both First Majestic and Power Nickel 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 Power Nickel 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 Power Nickel, you can compare the effects of market volatilities on First Majestic and Power Nickel 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 Power Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Power Nickel.
Diversification Opportunities for First Majestic and Power Nickel
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Power is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Power Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Nickel 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 Power Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Nickel has no effect on the direction of First Majestic i.e., First Majestic and Power Nickel go up and down completely randomly.
Pair Corralation between First Majestic and Power Nickel
Assuming the 90 days horizon First Majestic is expected to generate 5.51 times less return on investment than Power Nickel. But when comparing it to its historical volatility, First Majestic Silver is 1.43 times less risky than Power Nickel. It trades about 0.03 of its potential returns per unit of risk. Power Nickel is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Power Nickel on September 3, 2024 and sell it today you would earn a total of 52.00 from holding Power Nickel or generate 226.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Power Nickel
Performance |
| Timeline |
| First Majestic Silver |
| Power Nickel |
First Majestic and Power Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Power Nickel
The main advantage of trading using opposite First Majestic and Power Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Power Nickel 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 Power Nickel will offset losses from the drop in Power Nickel's long position.| First Majestic vs. Precious Metals And | First Majestic vs. Thunderbird Entertainment Group | First Majestic vs. CNJ Capital Investments | First Majestic vs. Arbor Metals Corp |
| Power Nickel vs. Magna Mining | Power Nickel vs. SPC Nickel Corp | Power Nickel vs. Grid Metals Corp | Power Nickel vs. Flying Nickel Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |