Correlation Between O3 Mining and First Majestic
Can any of the company-specific risk be diversified away by investing in both O3 Mining 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 O3 Mining and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between O3 Mining and First Majestic Silver, you can compare the effects of market volatilities on O3 Mining 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 O3 Mining with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of O3 Mining and First Majestic.
Diversification Opportunities for O3 Mining and First Majestic
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OIII and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding O3 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 O3 Mining 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 O3 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 O3 Mining i.e., O3 Mining and First Majestic go up and down completely randomly.
Pair Corralation between O3 Mining and First Majestic
Assuming the 90 days trading horizon O3 Mining is expected to under-perform the First Majestic. But the stock apears to be less risky and, when comparing its historical volatility, O3 Mining is 1.27 times less risky than First Majestic. The stock trades about -0.01 of its potential returns per unit of risk. The First Majestic Silver is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 821.00 in First Majestic Silver on August 26, 2024 and sell it today you would earn a total of 60.00 from holding First Majestic Silver or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
O3 Mining vs. First Majestic Silver
Performance |
| Timeline |
| O3 Mining |
| First Majestic Silver |
O3 Mining and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with O3 Mining and First Majestic
The main advantage of trading using opposite O3 Mining and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if O3 Mining 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.| O3 Mining vs. First Majestic Silver | O3 Mining vs. Ivanhoe Energy | O3 Mining vs. Orezone Gold Corp | O3 Mining vs. Faraday Copper Corp |
| First Majestic vs. Canadian General Investments | First Majestic vs. 2028 Investment Grade | First Majestic vs. Brookfield Investments | First Majestic vs. Upstart Investments |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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