Correlation Between First Majestic and Sienna Resources
Can any of the company-specific risk be diversified away by investing in both First Majestic and Sienna 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 Sienna 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 Sienna Resources, you can compare the effects of market volatilities on First Majestic and Sienna 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 Sienna Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Sienna Resources.
Diversification Opportunities for First Majestic and Sienna Resources
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Sienna is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Sienna Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna 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 Sienna Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Resources has no effect on the direction of First Majestic i.e., First Majestic and Sienna Resources go up and down completely randomly.
Pair Corralation between First Majestic and Sienna Resources
Assuming the 90 days horizon First Majestic is expected to generate 4.9 times less return on investment than Sienna Resources. But when comparing it to its historical volatility, First Majestic Silver is 3.24 times less risky than Sienna Resources. It trades about 0.03 of its potential returns per unit of risk. Sienna Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Sienna Resources on September 12, 2024 and sell it today you would lose (1.00) from holding Sienna Resources or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Sienna Resources
Performance |
| Timeline |
| First Majestic Silver |
| Sienna Resources |
First Majestic and Sienna Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Sienna Resources
The main advantage of trading using opposite First Majestic and Sienna Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Sienna 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 Sienna Resources will offset losses from the drop in Sienna Resources' long position.| First Majestic vs. Wishpond Technologies | First Majestic vs. 2028 Investment Grade | First Majestic vs. Tree Island Steel | First Majestic vs. Advent Wireless |
| Sienna Resources vs. Quorum Information Technologies | Sienna Resources vs. Bank of Nova | Sienna Resources vs. US Financial 15 | Sienna Resources vs. Firan Technology Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |