Correlation Between Lumina Gold and First Majestic
Can any of the company-specific risk be diversified away by investing in both Lumina Gold 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 Lumina Gold and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumina Gold Corp and First Majestic Silver, you can compare the effects of market volatilities on Lumina Gold 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 Lumina Gold with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumina Gold and First Majestic.
Diversification Opportunities for Lumina Gold and First Majestic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumina and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lumina Gold Corp 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 Lumina Gold 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 Lumina Gold Corp 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 Lumina Gold i.e., Lumina Gold and First Majestic go up and down completely randomly.
Pair Corralation between Lumina Gold and First Majestic
Assuming the 90 days horizon Lumina Gold is expected to generate 2.94 times less return on investment than First Majestic. But when comparing it to its historical volatility, Lumina Gold Corp is 1.07 times less risky than First Majestic. It trades about 0.03 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 754.00 in First Majestic Silver on August 29, 2024 and sell it today you would earn a total of 111.00 from holding First Majestic Silver or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumina Gold Corp vs. First Majestic Silver
Performance |
| Timeline |
| Lumina Gold Corp |
| First Majestic Silver |
Lumina Gold and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumina Gold and First Majestic
The main advantage of trading using opposite Lumina Gold and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumina Gold 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.| Lumina Gold vs. Bluestone Resources | Lumina Gold vs. Kore Mining | Lumina Gold vs. Torq Resources | Lumina Gold vs. Regulus Resources |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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