Correlation Between First Majestic and Velocity Minerals
Can any of the company-specific risk be diversified away by investing in both First Majestic and Velocity Minerals 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 Velocity Minerals 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 Velocity Minerals, you can compare the effects of market volatilities on First Majestic and Velocity Minerals 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 Velocity Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Velocity Minerals.
Diversification Opportunities for First Majestic and Velocity Minerals
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Velocity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Velocity Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velocity Minerals 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 Velocity Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velocity Minerals has no effect on the direction of First Majestic i.e., First Majestic and Velocity Minerals go up and down completely randomly.
Pair Corralation between First Majestic and Velocity Minerals
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Velocity Minerals. In addition to that, First Majestic is 1.1 times more volatile than Velocity Minerals. It trades about -0.4 of its total potential returns per unit of risk. Velocity Minerals is currently generating about -0.21 per unit of volatility. If you would invest 19.00 in Velocity Minerals on August 30, 2024 and sell it today you would lose (2.00) from holding Velocity Minerals or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
First Majestic Silver vs. Velocity Minerals
Performance |
| Timeline |
| First Majestic Silver |
| Velocity Minerals |
First Majestic and Velocity Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Velocity Minerals
The main advantage of trading using opposite First Majestic and Velocity Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Velocity Minerals 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 Velocity Minerals will offset losses from the drop in Velocity Minerals' long position.| First Majestic vs. Canso Select Opportunities | First Majestic vs. Caribbean Utilities | First Majestic vs. Toronto Dominion Bank | First Majestic vs. Diamond Estates Wines |
| Velocity Minerals vs. Advent Wireless | Velocity Minerals vs. Slate Grocery REIT | Velocity Minerals vs. Exco Technologies Limited | Velocity Minerals vs. CVW CleanTech |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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