Correlation Between FPX Nickel and First Majestic
Can any of the company-specific risk be diversified away by investing in both FPX Nickel 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 FPX Nickel and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FPX Nickel Corp and First Majestic Silver, you can compare the effects of market volatilities on FPX Nickel 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 FPX Nickel with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPX Nickel and First Majestic.
Diversification Opportunities for FPX Nickel and First Majestic
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FPX and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel 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 FPX Nickel 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 FPX Nickel 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 FPX Nickel i.e., FPX Nickel and First Majestic go up and down completely randomly.
Pair Corralation between FPX Nickel and First Majestic
Assuming the 90 days horizon FPX Nickel Corp is expected to generate 1.25 times more return on investment than First Majestic. However, FPX Nickel is 1.25 times more volatile than First Majestic Silver. It trades about -0.08 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.32 per unit of risk. If you would invest 28.00 in FPX Nickel Corp on August 25, 2024 and sell it today you would lose (2.00) from holding FPX Nickel Corp or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FPX Nickel Corp vs. First Majestic Silver
Performance |
| Timeline |
| FPX Nickel Corp |
| First Majestic Silver |
FPX Nickel and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FPX Nickel and First Majestic
The main advantage of trading using opposite FPX Nickel and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPX Nickel 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.| FPX Nickel vs. First Majestic Silver | FPX Nickel vs. Ivanhoe Energy | FPX Nickel vs. Orezone Gold Corp | FPX Nickel 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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