Correlation Between First Majestic and Starcore International
Can any of the company-specific risk be diversified away by investing in both First Majestic and Starcore International 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 Starcore International 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 Starcore International Mines, you can compare the effects of market volatilities on First Majestic and Starcore International 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 Starcore International. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Starcore International.
Diversification Opportunities for First Majestic and Starcore International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Starcore is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Starcore International Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starcore International 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 Starcore International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starcore International has no effect on the direction of First Majestic i.e., First Majestic and Starcore International go up and down completely randomly.
Pair Corralation between First Majestic and Starcore International
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Starcore International. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 3.16 times less risky than Starcore International. The stock trades about -0.25 of its potential returns per unit of risk. The Starcore International Mines is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Starcore International Mines on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Starcore International Mines or generate 0.0% 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. Starcore International Mines
Performance |
| Timeline |
| First Majestic Silver |
| Starcore International |
First Majestic and Starcore International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Starcore International
The main advantage of trading using opposite First Majestic and Starcore International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Starcore International 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 Starcore International will offset losses from the drop in Starcore International's long position.| First Majestic vs. Converge Technology Solutions | First Majestic vs. Firan Technology Group | First Majestic vs. Broadcom | First Majestic vs. Perseus Mining |
| Starcore International vs. Kiplin Metals | Starcore International vs. Pure Energy Minerals | Starcore International vs. Noram Lithium Corp | Starcore International vs. Minnova 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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