Correlation Between Americas Gold and First Majestic
Can any of the company-specific risk be diversified away by investing in both Americas 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 Americas 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 Americas Gold and and First Majestic Silver, you can compare the effects of market volatilities on Americas 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 Americas Gold with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americas Gold and First Majestic.
Diversification Opportunities for Americas Gold and First Majestic
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Americas and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Americas Gold and 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 Americas 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 Americas Gold and 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 Americas Gold i.e., Americas Gold and First Majestic go up and down completely randomly.
Pair Corralation between Americas Gold and First Majestic
Assuming the 90 days trading horizon Americas Gold and is expected to generate 1.39 times more return on investment than First Majestic. However, Americas Gold is 1.39 times more volatile than First Majestic Silver. It trades about -0.05 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.12 per unit of risk. If you would invest 38.00 in Americas Gold and on September 23, 2024 and sell it today you would lose (3.00) from holding Americas Gold and or give up 7.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Americas Gold and vs. First Majestic Silver
Performance |
| Timeline |
| Americas Gold |
| First Majestic Silver |
Americas Gold and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americas Gold and First Majestic
The main advantage of trading using opposite Americas Gold and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americas 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.| Americas Gold vs. Pan American Silver | Americas Gold vs. First Majestic Silver | Americas Gold vs. MAG Silver Corp | Americas Gold vs. Silvercorp Metals |
| First Majestic vs. Pan American Silver | First Majestic vs. MAG Silver Corp | First Majestic vs. Silvercorp Metals | First Majestic vs. Endeavour Silver Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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