Correlation Between First Majestic and Strategic Metals
Can any of the company-specific risk be diversified away by investing in both First Majestic and Strategic Metals 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 Strategic Metals 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 Strategic Metals, you can compare the effects of market volatilities on First Majestic and Strategic Metals 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 Strategic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Strategic Metals.
Diversification Opportunities for First Majestic and Strategic Metals
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Strategic is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Strategic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Metals 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 Strategic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Metals has no effect on the direction of First Majestic i.e., First Majestic and Strategic Metals go up and down completely randomly.
Pair Corralation between First Majestic and Strategic Metals
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Strategic Metals. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 2.03 times less risky than Strategic Metals. The stock trades about -0.35 of its potential returns per unit of risk. The Strategic Metals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Strategic Metals on August 31, 2024 and sell it today you would lose (1.00) from holding Strategic Metals or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Strategic Metals
Performance |
| Timeline |
| First Majestic Silver |
| Strategic Metals |
First Majestic and Strategic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Strategic Metals
The main advantage of trading using opposite First Majestic and Strategic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Strategic Metals 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 Strategic Metals will offset losses from the drop in Strategic Metals' long position.| First Majestic vs. Nova Leap Health | First Majestic vs. Leveljump Healthcare Corp | First Majestic vs. Perseus Mining | First Majestic vs. CVS HEALTH CDR |
| Strategic Metals vs. Orbit Garant Drilling | Strategic Metals vs. TGS Esports | Strategic Metals vs. NorthWest Healthcare Properties | Strategic Metals vs. Reliq Health Technologies |
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 Stocks Directory module to find actively traded stocks across global markets.
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