Correlation Between First Majestic and Volcanic Gold
Can any of the company-specific risk be diversified away by investing in both First Majestic and Volcanic 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 Volcanic 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 Volcanic Gold Mines, you can compare the effects of market volatilities on First Majestic and Volcanic 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 Volcanic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Volcanic Gold.
Diversification Opportunities for First Majestic and Volcanic Gold
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Volcanic is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Volcanic Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volcanic Gold Mines 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 Volcanic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volcanic Gold Mines has no effect on the direction of First Majestic i.e., First Majestic and Volcanic Gold go up and down completely randomly.
Pair Corralation between First Majestic and Volcanic Gold
Assuming the 90 days horizon First Majestic is expected to generate 231.47 times less return on investment than Volcanic Gold. But when comparing it to its historical volatility, First Majestic Silver is 2.61 times less risky than Volcanic Gold. It trades about 0.0 of its potential returns per unit of risk. Volcanic Gold Mines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Volcanic Gold Mines on November 4, 2024 and sell it today you would earn a total of 1.00 from holding Volcanic Gold Mines or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Majestic Silver vs. Volcanic Gold Mines
Performance |
| Timeline |
| First Majestic Silver |
| Volcanic Gold Mines |
First Majestic and Volcanic Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Volcanic Gold
The main advantage of trading using opposite First Majestic and Volcanic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Volcanic 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 Volcanic Gold will offset losses from the drop in Volcanic Gold's long position.| First Majestic vs. Contagious Gaming | First Majestic vs. WELL Health Technologies | First Majestic vs. Champion Gaming Group | First Majestic vs. Advent Wireless |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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