Correlation Between International Metals and First Majestic
Can any of the company-specific risk be diversified away by investing in both International 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 International 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 International Metals Mining and First Majestic Silver, you can compare the effects of market volatilities on International 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 International Metals with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Metals and First Majestic.
Diversification Opportunities for International Metals and First Majestic
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding International Metals 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 International 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 International Metals 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 International Metals i.e., International Metals and First Majestic go up and down completely randomly.
Pair Corralation between International Metals and First Majestic
Assuming the 90 days horizon International Metals Mining is expected to generate 3.23 times more return on investment than First Majestic. However, International Metals is 3.23 times more volatile than First Majestic Silver. It trades about 0.02 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.01 per unit of risk. If you would invest 40.00 in International Metals Mining on October 12, 2024 and sell it today you would lose (32.50) from holding International Metals Mining or give up 81.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
International Metals Mining vs. First Majestic Silver
Performance |
| Timeline |
| International Metals |
| First Majestic Silver |
International Metals and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Metals and First Majestic
The main advantage of trading using opposite International Metals and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International 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.| International Metals vs. Verizon Communications CDR | International Metals vs. Nova Leap Health | International Metals vs. Champion Iron | International Metals vs. UnitedHealth Group CDR |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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