Correlation Between First Majestic and Rockhaven Resources
Can any of the company-specific risk be diversified away by investing in both First Majestic and Rockhaven Resources 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 Rockhaven Resources 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 Rockhaven Resources, you can compare the effects of market volatilities on First Majestic and Rockhaven Resources 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 Rockhaven Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Rockhaven Resources.
Diversification Opportunities for First Majestic and Rockhaven Resources
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Rockhaven is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Rockhaven Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockhaven Resources 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 Rockhaven Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockhaven Resources has no effect on the direction of First Majestic i.e., First Majestic and Rockhaven Resources go up and down completely randomly.
Pair Corralation between First Majestic and Rockhaven Resources
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Rockhaven Resources. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 1.96 times less risky than Rockhaven Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Rockhaven Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Rockhaven Resources on November 28, 2024 and sell it today you would earn a total of 1.00 from holding Rockhaven Resources or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Rockhaven Resources
Performance |
| Timeline |
| First Majestic Silver |
| Rockhaven Resources |
First Majestic and Rockhaven Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Rockhaven Resources
The main advantage of trading using opposite First Majestic and Rockhaven Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Rockhaven Resources 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 Rockhaven Resources will offset losses from the drop in Rockhaven Resources' long position.| First Majestic vs. Ivanhoe Energy | First Majestic vs. Flinders Resources Limited | First Majestic vs. Orezone Gold Corp | First Majestic vs. Faraday Copper Corp |
| Rockhaven Resources vs. Independence Gold Corp | Rockhaven Resources vs. Avrupa Minerals | Rockhaven Resources vs. Tristar Gold | Rockhaven Resources vs. Thunderstruck Resources |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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