Correlation Between First Majestic and Santacruz Silv
Can any of the company-specific risk be diversified away by investing in both First Majestic and Santacruz Silv 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 Santacruz Silv 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 Santacruz Silv, you can compare the effects of market volatilities on First Majestic and Santacruz Silv 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 Santacruz Silv. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Santacruz Silv.
Diversification Opportunities for First Majestic and Santacruz Silv
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Santacruz is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Santacruz Silv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santacruz Silv 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 Santacruz Silv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santacruz Silv has no effect on the direction of First Majestic i.e., First Majestic and Santacruz Silv go up and down completely randomly.
Pair Corralation between First Majestic and Santacruz Silv
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.69 times more return on investment than Santacruz Silv. However, First Majestic Silver is 1.46 times less risky than Santacruz Silv. It trades about 0.15 of its potential returns per unit of risk. Santacruz Silv is currently generating about 0.08 per unit of risk. If you would invest 629.00 in First Majestic Silver on September 7, 2024 and sell it today you would earn a total of 241.00 from holding First Majestic Silver or generate 38.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Majestic Silver vs. Santacruz Silv
Performance |
Timeline |
First Majestic Silver |
Santacruz Silv |
First Majestic and Santacruz Silv Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Majestic and Santacruz Silv
The main advantage of trading using opposite First Majestic and Santacruz Silv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Santacruz Silv 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 Santacruz Silv will offset losses from the drop in Santacruz Silv's long position.First Majestic vs. Canadian General Investments | First Majestic vs. Champion Gaming Group | First Majestic vs. Brookfield Investments | First Majestic vs. Westshore Terminals Investment |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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