Correlation Between First Majestic and T2 Metals
Can any of the company-specific risk be diversified away by investing in both First Majestic and T2 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 T2 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 T2 Metals Corp, you can compare the effects of market volatilities on First Majestic and T2 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 T2 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and T2 Metals.
Diversification Opportunities for First Majestic and T2 Metals
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and TWO is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and T2 Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T2 Metals 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 T2 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T2 Metals Corp has no effect on the direction of First Majestic i.e., First Majestic and T2 Metals go up and down completely randomly.
Pair Corralation between First Majestic and T2 Metals
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.65 times more return on investment than T2 Metals. However, First Majestic Silver is 1.54 times less risky than T2 Metals. It trades about -0.31 of its potential returns per unit of risk. T2 Metals Corp is currently generating about -0.29 per unit of risk. If you would invest 1,062 in First Majestic Silver on August 29, 2024 and sell it today you would lose (197.00) from holding First Majestic Silver or give up 18.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. T2 Metals Corp
Performance |
| Timeline |
| First Majestic Silver |
| T2 Metals Corp |
First Majestic and T2 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and T2 Metals
The main advantage of trading using opposite First Majestic and T2 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, T2 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 T2 Metals will offset losses from the drop in T2 Metals' long position.| First Majestic vs. 2028 Investment Grade | First Majestic vs. Western Investment | First Majestic vs. Atrium Mortgage Investment | First Majestic vs. Air Canada |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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