Correlation Between Dakota Gold and First Majestic

Can any of the company-specific risk be diversified away by investing in both Dakota 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 Dakota 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 Dakota Gold Corp and First Majestic Silver, you can compare the effects of market volatilities on Dakota 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 Dakota Gold with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dakota Gold and First Majestic.

Diversification Opportunities for Dakota Gold and First Majestic

0.4

Correlation Coefficient

Dakota Gold  First Majestic

Very weak diversification

The 3 months correlation between Dakota and First is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dakota Gold 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 Dakota 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 Dakota Gold 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 Dakota Gold i.e., Dakota Gold and First Majestic go up and down completely randomly.

Pair Corralation between Dakota Gold and First Majestic

Allowing for the 90-day total investment horizon Dakota Gold is expected to generate 6.65 times less return on investment than First Majestic. But when comparing it to its historical volatility, Dakota Gold Corp is 1.3 times less risky than First Majestic. It trades about 0.01 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  529.00  in First Majestic Silver on September 4, 2024 and sell it today you would earn a total of  65.00  from holding First Majestic Silver or generate 12.29% return on investment over 90 days.

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

Dakota Gold Corp  vs.  First Majestic Silver

Dakota Gold Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dakota Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dakota Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

First Majestic Silver

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, First Majestic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dakota Gold and First Majestic

The main advantage of trading using opposite Dakota Gold and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dakota 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.

The idea behind Dakota Gold Corp and First Majestic Silver 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.