Correlation Between First Majestic and IMetal Resources

Can any of the company-specific risk be diversified away by investing in both First Majestic and IMetal Resources 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 First Majestic and IMetal Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Majestic Silver and iMetal Resources, you can compare the effects of market volatilities on First Majestic and IMetal Resources 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 First Majestic with a short position of IMetal Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and IMetal Resources.

Diversification Opportunities for First Majestic and IMetal Resources

-0.41

Correlation Coefficient

First Majestic  IMetal Resources

Very good diversification

The 3 months correlation between First and IMetal is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and iMetal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iMetal Resources and First Majestic 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 First Majestic Silver are associated (or correlated) with IMetal Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iMetal Resources has no effect on the direction of First Majestic i.e., First Majestic and IMetal Resources go up and down completely randomly.

Pair Corralation between First Majestic and IMetal Resources

Assuming the 90 days horizon First Majestic Silver is expected to generate 0.5 times more return on investment than IMetal Resources. However, First Majestic Silver is 1.99 times less risky than IMetal Resources. It trades about 0.08 of its potential returns per unit of risk. iMetal Resources is currently generating about 0.0 per unit of risk. If you would invest  785.00  in First Majestic Silver on September 12, 2024 and sell it today you would earn a total of  123.00  from holding First Majestic Silver or generate 15.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

First Majestic Silver  vs.  iMetal Resources

First Majestic Silver

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

iMetal Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iMetal Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IMetal Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Majestic and IMetal Resources

The main advantage of trading using opposite First Majestic and IMetal Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, IMetal Resources 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 IMetal Resources will offset losses from the drop in IMetal Resources' long position.

The idea behind First Majestic Silver and iMetal Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.