Correlation Between Emerita Resources and First Majestic

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

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

Diversification Opportunities for Emerita Resources and First Majestic

-0.02

Correlation Coefficient

Emerita Resources  First Majestic

Good diversification

The 3 months correlation between Emerita and First is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Emerita Resources 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 Emerita Resources 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 Emerita Resources 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 Emerita Resources i.e., Emerita Resources and First Majestic go up and down completely randomly.

Pair Corralation between Emerita Resources and First Majestic

Assuming the 90 days horizon Emerita Resources Corp is expected to generate 1.02 times more return on investment than First Majestic. However, Emerita Resources is 1.02 times more volatile than First Majestic Silver. It trades about 0.13 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.11 per unit of risk. If you would invest  61.00  in Emerita Resources Corp on September 4, 2024 and sell it today you would earn a total of  21.00  from holding Emerita Resources Corp or generate 34.43% return on investment over 90 days.

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

Emerita Resources Corp  vs.  First Majestic Silver

Emerita Resources Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerita Resources Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Emerita Resources showed solid returns over the last few months and may actually be approaching a breakup point.

First Majestic Silver

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 8 (%) 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.

Pair Trading with Emerita Resources and First Majestic

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

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.