Correlation Between First Majestic and Tronox Holdings
Can any of the company-specific risk be diversified away by investing in both First Majestic and Tronox Holdings 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 Tronox Holdings 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 Tronox Holdings PLC, you can compare the effects of market volatilities on First Majestic and Tronox Holdings 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 Tronox Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Tronox Holdings.
Diversification Opportunities for First Majestic and Tronox Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Tronox is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Tronox Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tronox Holdings PLC 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 Tronox Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tronox Holdings PLC has no effect on the direction of First Majestic i.e., First Majestic and Tronox Holdings go up and down completely randomly.
Pair Corralation between First Majestic and Tronox Holdings
Allowing for the 90-day total investment horizon First Majestic Silver is expected to under-perform the Tronox Holdings. In addition to that, First Majestic is 1.4 times more volatile than Tronox Holdings PLC. It trades about -0.11 of its total potential returns per unit of risk. Tronox Holdings PLC is currently generating about 0.16 per unit of volatility. If you would invest 973.00 in Tronox Holdings PLC on November 2, 2024 and sell it today you would earn a total of 63.00 from holding Tronox Holdings PLC or generate 6.47% 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. Tronox Holdings PLC
Performance |
| Timeline |
| First Majestic Silver |
| Tronox Holdings PLC |
First Majestic and Tronox Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Tronox Holdings
The main advantage of trading using opposite First Majestic and Tronox Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Tronox Holdings 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 Tronox Holdings will offset losses from the drop in Tronox Holdings' 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 |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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