Correlation Between Perseus Mining and First Majestic
Can any of the company-specific risk be diversified away by investing in both Perseus 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 Perseus 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 Perseus Mining and First Majestic Silver, you can compare the effects of market volatilities on Perseus 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 Perseus Mining with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and First Majestic.
Diversification Opportunities for Perseus Mining and First Majestic
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Perseus and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Perseus 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 Perseus 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 Perseus 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 Perseus Mining i.e., Perseus Mining and First Majestic go up and down completely randomly.
Pair Corralation between Perseus Mining and First Majestic
Assuming the 90 days trading horizon Perseus Mining is expected to generate 0.73 times more return on investment than First Majestic. However, Perseus Mining is 1.37 times less risky than First Majestic. It trades about -0.18 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.35 per unit of risk. If you would invest 257.00 in Perseus Mining on August 28, 2024 and sell it today you would lose (21.00) from holding Perseus Mining or give up 8.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perseus Mining vs. First Majestic Silver
Performance |
| Timeline |
| Perseus Mining |
| First Majestic Silver |
Perseus Mining and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perseus Mining and First Majestic
The main advantage of trading using opposite Perseus Mining and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus 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.| Perseus Mining vs. First Majestic Silver | Perseus Mining vs. Ivanhoe Energy | Perseus Mining vs. Orezone Gold Corp |
| First Majestic vs. Quisitive Technology Solutions | First Majestic vs. Canso Select Opportunities | First Majestic vs. Canadian General Investments | First Majestic vs. Sparx Technology |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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