Correlation Between Fredonia Mining and First Majestic
Can any of the company-specific risk be diversified away by investing in both Fredonia 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 Fredonia 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 Fredonia Mining and First Majestic Silver, you can compare the effects of market volatilities on Fredonia 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 Fredonia Mining with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fredonia Mining and First Majestic.
Diversification Opportunities for Fredonia Mining and First Majestic
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fredonia and First is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fredonia Mining 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 Fredonia 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 Fredonia Mining 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 Fredonia Mining i.e., Fredonia Mining and First Majestic go up and down completely randomly.
Pair Corralation between Fredonia Mining and First Majestic
Assuming the 90 days trading horizon Fredonia Mining is expected to generate 3.41 times more return on investment than First Majestic. However, Fredonia Mining is 3.41 times more volatile than First Majestic Silver. It trades about 0.05 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.03 per unit of risk. If you would invest 25.00 in Fredonia Mining on October 11, 2024 and sell it today you would lose (2.00) from holding Fredonia Mining or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fredonia Mining vs. First Majestic Silver
Performance |
| Timeline |
| Fredonia Mining |
| First Majestic Silver |
Fredonia Mining and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fredonia Mining and First Majestic
The main advantage of trading using opposite Fredonia Mining and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fredonia 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.| Fredonia Mining vs. First Majestic Silver | Fredonia Mining vs. Ivanhoe Energy | Fredonia Mining vs. Flinders Resources Limited | Fredonia Mining vs. Orezone Gold Corp |
| First Majestic vs. US Financial 15 | First Majestic vs. Maple Leaf Foods | First Majestic vs. Hampton Financial Corp | First Majestic vs. Guru Organic Energy |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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