Correlation Between Thesis Gold and First Majestic

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

Diversification Opportunities for Thesis Gold and First Majestic

0.25

Correlation Coefficient

Thesis Gold  First Majestic

Modest diversification

The 3 months correlation between Thesis and First is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Thesis Gold 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 Thesis 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 Thesis Gold 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 Thesis Gold i.e., Thesis Gold and First Majestic go up and down completely randomly.

Pair Corralation between Thesis Gold and First Majestic

Assuming the 90 days horizon Thesis Gold is expected to under-perform the First Majestic. But the stock apears to be less risky and, when comparing its historical volatility, Thesis Gold is 1.14 times less risky than First Majestic. The stock trades about -0.08 of its potential returns per unit of risk. The First Majestic Silver is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  907.00  in First Majestic Silver on September 15, 2024 and sell it today you would lose (47.00) from holding First Majestic Silver or give up 5.18% of portfolio value over 90 days.

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

Thesis Gold  vs.  First Majestic Silver

Thesis Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thesis Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

First Majestic Silver

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Majestic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thesis Gold and First Majestic

The main advantage of trading using opposite Thesis Gold and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thesis 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 Thesis Gold 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.