Correlation Between Finlay Minerals and First Majestic
Can any of the company-specific risk be diversified away by investing in both Finlay Minerals 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 Finlay Minerals and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finlay Minerals and First Majestic Silver, you can compare the effects of market volatilities on Finlay Minerals 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 Finlay Minerals with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finlay Minerals and First Majestic.
Diversification Opportunities for Finlay Minerals and First Majestic
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Finlay and First is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Finlay Minerals 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 Finlay Minerals 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 Finlay Minerals 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 Finlay Minerals i.e., Finlay Minerals and First Majestic go up and down completely randomly.
Pair Corralation between Finlay Minerals and First Majestic
Assuming the 90 days horizon Finlay Minerals is expected to generate 9.04 times more return on investment than First Majestic. However, Finlay Minerals is 9.04 times more volatile than First Majestic Silver. It trades about 0.16 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.13 per unit of risk. If you would invest 3.00 in Finlay Minerals on October 21, 2024 and sell it today you would earn a total of 1.50 from holding Finlay Minerals or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finlay Minerals vs. First Majestic Silver
Performance |
| Timeline |
| Finlay Minerals |
| First Majestic Silver |
Finlay Minerals and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finlay Minerals and First Majestic
The main advantage of trading using opposite Finlay Minerals and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finlay Minerals 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.| Finlay Minerals vs. First Majestic Silver | Finlay Minerals vs. Ivanhoe Energy | Finlay Minerals vs. Flinders Resources Limited | Finlay Minerals vs. Orezone Gold Corp |
| First Majestic vs. Computer Modelling Group | First Majestic vs. Calibre Mining Corp | First Majestic vs. Mako Mining Corp | First Majestic vs. Cogeco Communications |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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