Correlation Between First Majestic and Sokoman Minerals
Can any of the company-specific risk be diversified away by investing in both First Majestic and Sokoman Minerals 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 Sokoman Minerals 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 Sokoman Minerals Corp, you can compare the effects of market volatilities on First Majestic and Sokoman Minerals 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 Sokoman Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Sokoman Minerals.
Diversification Opportunities for First Majestic and Sokoman Minerals
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Sokoman is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Sokoman Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sokoman Minerals 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 Sokoman Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sokoman Minerals Corp has no effect on the direction of First Majestic i.e., First Majestic and Sokoman Minerals go up and down completely randomly.
Pair Corralation between First Majestic and Sokoman Minerals
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Sokoman Minerals. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 3.58 times less risky than Sokoman Minerals. The stock trades about -0.31 of its potential returns per unit of risk. The Sokoman Minerals Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Sokoman Minerals Corp on August 28, 2024 and sell it today you would lose (0.50) from holding Sokoman Minerals Corp or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Sokoman Minerals Corp
Performance |
| Timeline |
| First Majestic Silver |
| Sokoman Minerals Corp |
First Majestic and Sokoman Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Sokoman Minerals
The main advantage of trading using opposite First Majestic and Sokoman Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Sokoman Minerals 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 Sokoman Minerals will offset losses from the drop in Sokoman Minerals' long position.| First Majestic vs. 2028 Investment Grade | First Majestic vs. Western Investment | First Majestic vs. Atrium Mortgage Investment | First Majestic vs. Air Canada |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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