Correlation Between Conifex Timber and First Majestic
Can any of the company-specific risk be diversified away by investing in both Conifex Timber 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 Conifex Timber and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Conifex Timber and First Majestic Silver, you can compare the effects of market volatilities on Conifex Timber 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 Conifex Timber with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conifex Timber and First Majestic.
Diversification Opportunities for Conifex Timber and First Majestic
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Conifex and First is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Conifex Timber 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 Conifex Timber 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 Conifex Timber 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 Conifex Timber i.e., Conifex Timber and First Majestic go up and down completely randomly.
Pair Corralation between Conifex Timber and First Majestic
Assuming the 90 days trading horizon Conifex Timber is expected to generate 2.08 times more return on investment than First Majestic. However, Conifex Timber is 2.08 times more volatile than First Majestic Silver. It trades about -0.12 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.29 per unit of risk. If you would invest 50.00 in Conifex Timber on September 1, 2024 and sell it today you would lose (8.00) from holding Conifex Timber or give up 16.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Conifex Timber vs. First Majestic Silver
Performance |
| Timeline |
| Conifex Timber |
| First Majestic Silver |
Conifex Timber and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Conifex Timber and First Majestic
The main advantage of trading using opposite Conifex Timber and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Conifex Timber 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.| Conifex Timber vs. Western Forest Products | Conifex Timber vs. Interfor Corp | Conifex Timber vs. Canfor Pulp Products | Conifex Timber vs. Canfor |
| First Majestic vs. Slate Grocery REIT | First Majestic vs. Toronto Dominion Bank | First Majestic vs. Enduro Metals Corp | First Majestic vs. Intact Financial Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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