Correlation Between First Mining and First Majestic
Can any of the company-specific risk be diversified away by investing in both First Mining 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 First Mining and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Mining Gold and First Majestic Silver, you can compare the effects of market volatilities on First Mining 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 First Mining with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mining and First Majestic.
Diversification Opportunities for First Mining and First Majestic
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold 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 First Mining 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 First Mining Gold 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 First Mining i.e., First Mining and First Majestic go up and down completely randomly.
Pair Corralation between First Mining and First Majestic
Assuming the 90 days horizon First Mining is expected to generate 16.2 times less return on investment than First Majestic. In addition to that, First Mining is 1.3 times more volatile than First Majestic Silver. It trades about 0.0 of its total potential returns per unit of risk. First Majestic Silver is currently generating about 0.0 per unit of volatility. If you would invest 1,152 in First Majestic Silver on September 5, 2024 and sell it today you would lose (260.00) from holding First Majestic Silver or give up 22.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
First Mining Gold vs. First Majestic Silver
Performance |
| Timeline |
| First Mining Gold |
| First Majestic Silver |
First Mining and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mining and First Majestic
The main advantage of trading using opposite First Mining and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mining 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.| First Mining vs. First Majestic Silver | First Mining vs. Ivanhoe Energy | First Mining vs. Orezone Gold Corp | First Mining 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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