Correlation Between Lithium South and First Majestic
Can any of the company-specific risk be diversified away by investing in both Lithium South 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 Lithium South and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium South Development and First Majestic Silver, you can compare the effects of market volatilities on Lithium South 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 Lithium South with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium South and First Majestic.
Diversification Opportunities for Lithium South and First Majestic
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lithium and First is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lithium South Development 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 Lithium South 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 Lithium South Development 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 Lithium South i.e., Lithium South and First Majestic go up and down completely randomly.
Pair Corralation between Lithium South and First Majestic
Assuming the 90 days horizon Lithium South Development is expected to under-perform the First Majestic. In addition to that, Lithium South is 1.65 times more volatile than First Majestic Silver. It trades about -0.14 of its total potential returns per unit of risk. First Majestic Silver is currently generating about 0.11 per unit of volatility. If you would invest 713.00 in First Majestic Silver on September 4, 2024 and sell it today you would earn a total of 179.00 from holding First Majestic Silver or generate 25.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium South Development vs. First Majestic Silver
Performance |
| Timeline |
| Lithium South Development |
| First Majestic Silver |
Lithium South and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium South and First Majestic
The main advantage of trading using opposite Lithium South and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium South 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.| Lithium South vs. First Majestic Silver | Lithium South vs. Ivanhoe Energy | Lithium South vs. Orezone Gold Corp | Lithium South vs. Faraday Copper Corp |
| First Majestic vs. TGS Esports | First Majestic vs. Renoworks Software | First Majestic vs. Rogers Communications | First Majestic vs. Jamieson Wellness |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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