Correlation Between T2 Metals and First Majestic
Can any of the company-specific risk be diversified away by investing in both T2 Metals 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 T2 Metals and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T2 Metals Corp and First Majestic Silver, you can compare the effects of market volatilities on T2 Metals 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 T2 Metals with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of T2 Metals and First Majestic.
Diversification Opportunities for T2 Metals and First Majestic
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TWO and First is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding T2 Metals 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 T2 Metals 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 T2 Metals 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 T2 Metals i.e., T2 Metals and First Majestic go up and down completely randomly.
Pair Corralation between T2 Metals and First Majestic
Assuming the 90 days horizon T2 Metals Corp is expected to generate 2.2 times more return on investment than First Majestic. However, T2 Metals is 2.2 times more volatile than First Majestic Silver. It trades about 0.09 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.03 per unit of risk. If you would invest 11.00 in T2 Metals Corp on August 25, 2024 and sell it today you would earn a total of 17.00 from holding T2 Metals Corp or generate 154.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
T2 Metals Corp vs. First Majestic Silver
Performance |
| Timeline |
| T2 Metals Corp |
| First Majestic Silver |
T2 Metals and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T2 Metals and First Majestic
The main advantage of trading using opposite T2 Metals and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T2 Metals 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.| T2 Metals vs. First Majestic Silver | T2 Metals vs. Ivanhoe Energy | T2 Metals vs. Orezone Gold Corp | T2 Metals 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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