Correlation Between Black Mammoth and First Majestic
Can any of the company-specific risk be diversified away by investing in both Black Mammoth and First Majestic 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 Black Mammoth and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Mammoth Metals and First Majestic Silver, you can compare the effects of market volatilities on Black Mammoth and First Majestic 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 Black Mammoth with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Mammoth and First Majestic.
Diversification Opportunities for Black Mammoth and First Majestic
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Black and First is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Black Mammoth Metals and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Black Mammoth 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 Black Mammoth Metals are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Black Mammoth i.e., Black Mammoth and First Majestic go up and down completely randomly.
Pair Corralation between Black Mammoth and First Majestic
Assuming the 90 days horizon Black Mammoth Metals is expected to generate 2.45 times more return on investment than First Majestic. However, Black Mammoth is 2.45 times more volatile than First Majestic Silver. It trades about 0.07 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.35 per unit of risk. If you would invest 91.00 in Black Mammoth Metals on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Black Mammoth Metals or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Mammoth Metals vs. First Majestic Silver
Performance |
| Timeline |
| Black Mammoth Metals |
| First Majestic Silver |
Black Mammoth and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Mammoth and First Majestic
The main advantage of trading using opposite Black Mammoth and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Mammoth position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Black Mammoth vs. First Majestic Silver | Black Mammoth vs. Ivanhoe Energy | Black Mammoth vs. Orezone Gold Corp | Black Mammoth vs. Faraday Copper Corp |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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