Correlation Between First Majestic and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both First Majestic and Harmony 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 Harmony 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 Harmony Gold Mining, you can compare the effects of market volatilities on First Majestic and Harmony 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Harmony Gold.
Diversification Opportunities for First Majestic and Harmony Gold
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Harmony is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of First Majestic i.e., First Majestic and Harmony Gold go up and down completely randomly.
Pair Corralation between First Majestic and Harmony Gold
Allowing for the 90-day total investment horizon First Majestic Silver is expected to under-perform the Harmony Gold. In addition to that, First Majestic is 1.09 times more volatile than Harmony Gold Mining. It trades about -0.03 of its total potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.03 per unit of volatility. If you would invest 1,053 in Harmony Gold Mining on November 1, 2024 and sell it today you would earn a total of 37.00 from holding Harmony Gold Mining or generate 3.51% 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. Harmony Gold Mining
Performance |
| Timeline |
| First Majestic Silver |
| Harmony Gold Mining |
First Majestic and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Harmony Gold
The main advantage of trading using opposite First Majestic and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Harmony 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| First Majestic vs. Aya Gold Silver | First Majestic vs. Silvercorp Metals | First Majestic vs. Discovery Metals Corp | First Majestic vs. Bald Eagle Gold |
| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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