Correlation Between First Majestic and World Copper
Can any of the company-specific risk be diversified away by investing in both First Majestic and World Copper 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 World Copper 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 World Copper, you can compare the effects of market volatilities on First Majestic and World Copper 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 World Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and World Copper.
Diversification Opportunities for First Majestic and World Copper
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and World is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and World Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Copper 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 World Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Copper has no effect on the direction of First Majestic i.e., First Majestic and World Copper go up and down completely randomly.
Pair Corralation between First Majestic and World Copper
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.58 times more return on investment than World Copper. However, First Majestic Silver is 1.72 times less risky than World Copper. It trades about 0.04 of its potential returns per unit of risk. World Copper is currently generating about 0.0 per unit of risk. If you would invest 866.00 in First Majestic Silver on September 14, 2024 and sell it today you would earn a total of 16.00 from holding First Majestic Silver or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. World Copper
Performance |
| Timeline |
| First Majestic Silver |
| World Copper |
First Majestic and World Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and World Copper
The main advantage of trading using opposite First Majestic and World Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, World Copper 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 World Copper will offset losses from the drop in World Copper's long position.| First Majestic vs. Canso Credit Trust | First Majestic vs. NorthWest Healthcare Properties | First Majestic vs. National Bank of | First Majestic vs. Metalero Mining Corp |
| World Copper vs. Arizona Sonoran Copper | World Copper vs. Marimaca Copper Corp | World Copper vs. QC Copper and | World Copper vs. Dore Copper Mining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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