Correlation Between Silver Spruce and First Majestic
Can any of the company-specific risk be diversified away by investing in both Silver Spruce 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 Silver Spruce and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Spruce Resources and First Majestic Silver, you can compare the effects of market volatilities on Silver Spruce 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 Silver Spruce with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Spruce and First Majestic.
Diversification Opportunities for Silver Spruce and First Majestic
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silver and First is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spruce Resources 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 Silver Spruce 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 Silver Spruce Resources 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 Silver Spruce i.e., Silver Spruce and First Majestic go up and down completely randomly.
Pair Corralation between Silver Spruce and First Majestic
Assuming the 90 days horizon Silver Spruce Resources is expected to generate 6.24 times more return on investment than First Majestic. However, Silver Spruce is 6.24 times more volatile than First Majestic Silver. It trades about 0.08 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.05 per unit of risk. If you would invest 2.00 in Silver Spruce Resources on August 29, 2024 and sell it today you would lose (1.00) from holding Silver Spruce Resources or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Silver Spruce Resources vs. First Majestic Silver
Performance |
| Timeline |
| Silver Spruce Resources |
| First Majestic Silver |
Silver Spruce and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silver Spruce and First Majestic
The main advantage of trading using opposite Silver Spruce and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Spruce 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.| Silver Spruce vs. Sandfire Resources America | Silver Spruce vs. Slam Exploration | Silver Spruce vs. Richmond Minerals | Silver Spruce vs. Stellar AfricaGold |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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