Correlation Between International Tower and First Majestic
Can any of the company-specific risk be diversified away by investing in both International Tower 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 Tower 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 Tower Hill and First Majestic Silver, you can compare the effects of market volatilities on International Tower 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 Tower with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Tower and First Majestic.
Diversification Opportunities for International Tower and First Majestic
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and First is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding International Tower Hill 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 Tower 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 Tower Hill 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 Tower i.e., International Tower and First Majestic go up and down completely randomly.
Pair Corralation between International Tower and First Majestic
Assuming the 90 days trading horizon International Tower Hill is expected to generate 1.46 times more return on investment than First Majestic. However, International Tower is 1.46 times more volatile than First Majestic Silver. It trades about 0.04 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 52.00 in International Tower Hill on August 29, 2024 and sell it today you would earn a total of 13.00 from holding International Tower Hill or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Tower Hill vs. First Majestic Silver
Performance |
| Timeline |
| International Tower Hill |
| First Majestic Silver |
International Tower and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Tower and First Majestic
The main advantage of trading using opposite International Tower and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Tower 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 Tower vs. First Majestic Silver | International Tower vs. Ivanhoe Energy | International Tower vs. Orezone Gold Corp | International Tower vs. Faraday Copper Corp |
| First Majestic vs. Talon Metals Corp | First Majestic vs. Champion Gaming Group | First Majestic vs. SalesforceCom CDR | First Majestic vs. Gfl Environmental Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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