Correlation Between Hannan Metals and First Majestic
Can any of the company-specific risk be diversified away by investing in both Hannan Metals 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 Hannan Metals and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and First Majestic Silver, you can compare the effects of market volatilities on Hannan Metals 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 Hannan Metals with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and First Majestic.
Diversification Opportunities for Hannan Metals and First Majestic
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hannan and First is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals 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 Hannan Metals 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 Hannan Metals 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 Hannan Metals i.e., Hannan Metals and First Majestic go up and down completely randomly.
Pair Corralation between Hannan Metals and First Majestic
Assuming the 90 days horizon Hannan Metals is expected to generate 2.37 times more return on investment than First Majestic. However, Hannan Metals is 2.37 times more volatile than First Majestic Silver. It trades about 0.1 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.06 per unit of risk. If you would invest 80.00 in Hannan Metals on November 28, 2024 and sell it today you would earn a total of 10.00 from holding Hannan Metals or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannan Metals vs. First Majestic Silver
Performance |
| Timeline |
| Hannan Metals |
| First Majestic Silver |
Hannan Metals and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and First Majestic
The main advantage of trading using opposite Hannan Metals and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals 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.| Hannan Metals vs. Midnight Sun Mining | Hannan Metals vs. Tristar Gold | Hannan Metals vs. Avrupa Minerals | Hannan Metals vs. Minco Capital Corp |
| First Majestic vs. Ivanhoe Energy | First Majestic vs. Flinders Resources Limited | First Majestic vs. Orezone Gold Corp | First Majestic vs. Faraday Copper Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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