Correlation Between First Majestic and Torq Resources
Can any of the company-specific risk be diversified away by investing in both First Majestic and Torq 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 Torq 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 Torq Resources, you can compare the effects of market volatilities on First Majestic and Torq 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 Torq Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Torq Resources.
Diversification Opportunities for First Majestic and Torq Resources
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Torq is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Torq Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torq 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 Torq Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torq Resources has no effect on the direction of First Majestic i.e., First Majestic and Torq Resources go up and down completely randomly.
Pair Corralation between First Majestic and Torq Resources
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.34 times more return on investment than Torq Resources. However, First Majestic Silver is 2.96 times less risky than Torq Resources. It trades about 0.1 of its potential returns per unit of risk. Torq Resources is currently generating about 0.02 per unit of risk. If you would invest 759.00 in First Majestic Silver on November 27, 2024 and sell it today you would earn a total of 48.00 from holding First Majestic Silver or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Torq Resources
Performance |
| Timeline |
| First Majestic Silver |
| Torq Resources |
First Majestic and Torq Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Torq Resources
The main advantage of trading using opposite First Majestic and Torq Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Torq 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 Torq Resources will offset losses from the drop in Torq Resources' long position.| First Majestic vs. Ivanhoe Energy | First Majestic vs. Flinders Resources Limited | First Majestic vs. Orezone Gold Corp | First Majestic vs. Faraday Copper Corp |
| Torq Resources vs. Wildsky Resources | Torq Resources vs. Themac Resources Group | Torq Resources vs. Golden Pursuit Resources | Torq Resources vs. Black Mammoth Metals |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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