Correlation Between First Majestic and Summa Silver
Can any of the company-specific risk be diversified away by investing in both First Majestic and Summa Silver 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 Summa Silver 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 Summa Silver Corp, you can compare the effects of market volatilities on First Majestic and Summa Silver 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 Summa Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Summa Silver.
Diversification Opportunities for First Majestic and Summa Silver
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Summa is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver 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 Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of First Majestic i.e., First Majestic and Summa Silver go up and down completely randomly.
Pair Corralation between First Majestic and Summa Silver
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.75 times more return on investment than Summa Silver. However, First Majestic Silver is 1.33 times less risky than Summa Silver. It trades about 0.01 of its potential returns per unit of risk. Summa Silver Corp is currently generating about -0.03 per unit of risk. If you would invest 943.00 in First Majestic Silver on August 26, 2024 and sell it today you would lose (62.00) from holding First Majestic Silver or give up 6.57% 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. Summa Silver Corp
Performance |
| Timeline |
| First Majestic Silver |
| Summa Silver Corp |
First Majestic and Summa Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Summa Silver
The main advantage of trading using opposite First Majestic and Summa Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Summa Silver 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 Summa Silver will offset losses from the drop in Summa Silver's long position.| First Majestic vs. Canadian General Investments | First Majestic vs. 2028 Investment Grade | First Majestic vs. Brookfield Investments | First Majestic vs. Upstart Investments |
| Summa Silver vs. First Majestic Silver | Summa Silver vs. Ivanhoe Energy | Summa Silver vs. Orezone Gold Corp | Summa Silver vs. Faraday Copper 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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