Correlation Between First Majestic and Cornish Metals

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

Diversification Opportunities for First Majestic and Cornish Metals

0.12

Correlation Coefficient

First Majestic  Cornish Metals

Average diversification

The 3 months correlation between First and Cornish is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of First Majestic i.e., First Majestic and Cornish Metals go up and down completely randomly.

Pair Corralation between First Majestic and Cornish Metals

Assuming the 90 days trading horizon First Majestic Silver is expected to generate 0.86 times more return on investment than Cornish Metals. However, First Majestic Silver is 1.16 times less risky than Cornish Metals. It trades about 0.03 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.02 per unit of risk. If you would invest  748.00  in First Majestic Silver on October 9, 2024 and sell it today you would earn a total of  117.00  from holding First Majestic Silver or generate 15.64% return on investment over 90 days.

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

First Majestic Silver  vs.  Cornish Metals

First Majestic Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, First Majestic is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cornish Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cornish Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Cornish Metals

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

The idea behind First Majestic Silver and Cornish Metals 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.