Correlation Between Elemental Royalties and First Majestic
Can any of the company-specific risk be diversified away by investing in both Elemental Royalties 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 Elemental Royalties and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elemental Royalties Corp and First Majestic Silver, you can compare the effects of market volatilities on Elemental Royalties 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 Elemental Royalties with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elemental Royalties and First Majestic.
Diversification Opportunities for Elemental Royalties and First Majestic
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elemental and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Elemental Royalties 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 Elemental Royalties 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 Elemental Royalties 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 Elemental Royalties i.e., Elemental Royalties and First Majestic go up and down completely randomly.
Pair Corralation between Elemental Royalties and First Majestic
Assuming the 90 days horizon Elemental Royalties is expected to generate 4.65 times less return on investment than First Majestic. But when comparing it to its historical volatility, Elemental Royalties Corp is 1.6 times less risky than First Majestic. It trades about 0.01 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 795.00 in First Majestic Silver on September 12, 2024 and sell it today you would earn a total of 113.00 from holding First Majestic Silver or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elemental Royalties Corp vs. First Majestic Silver
Performance |
| Timeline |
| Elemental Royalties Corp |
| First Majestic Silver |
Elemental Royalties and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elemental Royalties and First Majestic
The main advantage of trading using opposite Elemental Royalties and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elemental Royalties 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.| Elemental Royalties vs. Empress Royalty Corp | Elemental Royalties vs. Sailfish Royalty Corp | Elemental Royalties vs. Orogen Royalties | Elemental Royalties vs. Metalla Royalty Streaming |
| First Majestic vs. Wishpond Technologies | First Majestic vs. 2028 Investment Grade | First Majestic vs. Tree Island Steel | First Majestic vs. Advent Wireless |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |