Correlation Between Defiance Silver and First Majestic
Can any of the company-specific risk be diversified away by investing in both Defiance Silver 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 Defiance Silver and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defiance Silver Corp and First Majestic Silver, you can compare the effects of market volatilities on Defiance Silver 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 Defiance Silver with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Silver and First Majestic.
Diversification Opportunities for Defiance Silver and First Majestic
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Defiance and First is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver 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 Defiance Silver 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 Defiance Silver 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 Defiance Silver i.e., Defiance Silver and First Majestic go up and down completely randomly.
Pair Corralation between Defiance Silver and First Majestic
Assuming the 90 days horizon Defiance Silver Corp is expected to generate 2.07 times more return on investment than First Majestic. However, Defiance Silver is 2.07 times more volatile than First Majestic Silver. It trades about 0.04 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.0 per unit of risk. If you would invest 16.00 in Defiance Silver Corp on August 25, 2024 and sell it today you would earn a total of 6.00 from holding Defiance Silver Corp or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Defiance Silver Corp vs. First Majestic Silver
Performance |
| Timeline |
| Defiance Silver Corp |
| First Majestic Silver |
Defiance Silver and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defiance Silver and First Majestic
The main advantage of trading using opposite Defiance Silver and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Silver 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.| Defiance Silver vs. First Majestic Silver | Defiance Silver vs. Ivanhoe Energy | Defiance Silver vs. Orezone Gold Corp | Defiance Silver vs. Faraday Copper Corp |
| First Majestic vs. Canadian General Investments | First Majestic vs. 2028 Investment Grade | First Majestic vs. Brookfield Investments | First Majestic vs. Upstart Investments |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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