Correlation Between Noram Lithium and First Majestic
Can any of the company-specific risk be diversified away by investing in both Noram Lithium 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 Noram Lithium and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noram Lithium Corp and First Majestic Silver, you can compare the effects of market volatilities on Noram Lithium 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 Noram Lithium with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noram Lithium and First Majestic.
Diversification Opportunities for Noram Lithium and First Majestic
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Noram and First is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Noram Lithium 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 Noram Lithium 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 Noram Lithium 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 Noram Lithium i.e., Noram Lithium and First Majestic go up and down completely randomly.
Pair Corralation between Noram Lithium and First Majestic
Assuming the 90 days horizon Noram Lithium Corp is expected to under-perform the First Majestic. In addition to that, Noram Lithium is 1.15 times more volatile than First Majestic Silver. It trades about -0.07 of its total potential returns per unit of risk. First Majestic Silver is currently generating about 0.08 per unit of volatility. If you would invest 746.00 in First Majestic Silver on August 28, 2024 and sell it today you would earn a total of 119.00 from holding First Majestic Silver or generate 15.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Noram Lithium Corp vs. First Majestic Silver
Performance |
| Timeline |
| Noram Lithium Corp |
| First Majestic Silver |
Noram Lithium and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noram Lithium and First Majestic
The main advantage of trading using opposite Noram Lithium and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noram Lithium 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.| Noram Lithium vs. First Majestic Silver | Noram Lithium vs. Ivanhoe Energy | Noram Lithium vs. Orezone Gold Corp | Noram Lithium vs. Faraday Copper Corp |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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