Correlation Between Commerce Resources and First Majestic
Can any of the company-specific risk be diversified away by investing in both Commerce Resources 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 Commerce Resources and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerce Resources Corp and First Majestic Silver, you can compare the effects of market volatilities on Commerce Resources 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 Commerce Resources with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Resources and First Majestic.
Diversification Opportunities for Commerce Resources and First Majestic
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commerce and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Resources Corp 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 Commerce Resources 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 Commerce Resources Corp 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 Commerce Resources i.e., Commerce Resources and First Majestic go up and down completely randomly.
Pair Corralation between Commerce Resources and First Majestic
Assuming the 90 days horizon Commerce Resources Corp is expected to under-perform the First Majestic. In addition to that, Commerce Resources is 2.59 times more volatile than First Majestic Silver. It trades about -0.36 of its total potential returns per unit of risk. First Majestic Silver is currently generating about -0.35 per unit of volatility. If you would invest 1,062 in First Majestic Silver on August 27, 2024 and sell it today you would lose (212.00) from holding First Majestic Silver or give up 19.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerce Resources Corp vs. First Majestic Silver
Performance |
| Timeline |
| Commerce Resources Corp |
| First Majestic Silver |
Commerce Resources and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerce Resources and First Majestic
The main advantage of trading using opposite Commerce Resources and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Resources 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.| Commerce Resources vs. First Majestic Silver | Commerce Resources vs. Ivanhoe Energy | Commerce Resources vs. Orezone Gold Corp | Commerce Resources vs. Faraday Copper Corp |
| First Majestic vs. Quisitive Technology Solutions | First Majestic vs. Canso Select Opportunities | First Majestic vs. Canadian General Investments | First Majestic vs. Sparx Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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