Correlation Between First Majestic and Santacruz Silver
Can any of the company-specific risk be diversified away by investing in both First Majestic and Santacruz Silver 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 Majestic and Santacruz Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Majestic Silver and Santacruz Silver Mining, you can compare the effects of market volatilities on First Majestic and Santacruz Silver 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 Majestic with a short position of Santacruz Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Santacruz Silver.
Diversification Opportunities for First Majestic and Santacruz Silver
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Santacruz is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Santacruz Silver Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santacruz Silver Mining and First Majestic 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 Majestic Silver are associated (or correlated) with Santacruz Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santacruz Silver Mining has no effect on the direction of First Majestic i.e., First Majestic and Santacruz Silver go up and down completely randomly.
Pair Corralation between First Majestic and Santacruz Silver
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Santacruz Silver. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 2.26 times less risky than Santacruz Silver. The stock trades about -0.12 of its potential returns per unit of risk. The Santacruz Silver Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Santacruz Silver Mining on September 23, 2024 and sell it today you would lose (1.00) from holding Santacruz Silver Mining or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Santacruz Silver Mining
Performance |
| Timeline |
| First Majestic Silver |
| Santacruz Silver Mining |
First Majestic and Santacruz Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Santacruz Silver
The main advantage of trading using opposite First Majestic and Santacruz Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Santacruz Silver 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 Santacruz Silver will offset losses from the drop in Santacruz Silver's long position.| First Majestic vs. Pan American Silver | First Majestic vs. MAG Silver Corp | First Majestic vs. Silvercorp Metals | First Majestic vs. Endeavour Silver Corp |
| Santacruz Silver vs. Pan American Silver | Santacruz Silver vs. First Majestic Silver | Santacruz Silver vs. MAG Silver Corp | Santacruz Silver vs. Silvercorp Metals |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |