Correlation Between First Majestic and Steppe Gold
Can any of the company-specific risk be diversified away by investing in both First Majestic and Steppe Gold 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 Steppe Gold 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 Steppe Gold, you can compare the effects of market volatilities on First Majestic and Steppe Gold 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 Steppe Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Steppe Gold.
Diversification Opportunities for First Majestic and Steppe Gold
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Steppe is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Steppe Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steppe Gold 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 Steppe Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steppe Gold has no effect on the direction of First Majestic i.e., First Majestic and Steppe Gold go up and down completely randomly.
Pair Corralation between First Majestic and Steppe Gold
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.61 times more return on investment than Steppe Gold. However, First Majestic Silver is 1.64 times less risky than Steppe Gold. It trades about -0.29 of its potential returns per unit of risk. Steppe Gold is currently generating about -0.22 per unit of risk. If you would invest 1,028 in First Majestic Silver on September 1, 2024 and sell it today you would lose (160.00) from holding First Majestic Silver or give up 15.56% 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. Steppe Gold
Performance |
| Timeline |
| First Majestic Silver |
| Steppe Gold |
First Majestic and Steppe Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Steppe Gold
The main advantage of trading using opposite First Majestic and Steppe Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Steppe Gold 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 Steppe Gold will offset losses from the drop in Steppe Gold's long position.| First Majestic vs. Slate Grocery REIT | First Majestic vs. Toronto Dominion Bank | First Majestic vs. Enduro Metals Corp | First Majestic vs. Intact Financial Corp |
| Steppe Gold vs. First Majestic Silver | Steppe Gold vs. Ivanhoe Energy | Steppe Gold vs. Orezone Gold Corp | Steppe Gold 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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