Correlation Between First Majestic and Aris Gold

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

Diversification Opportunities for First Majestic and Aris Gold

0.66

Correlation Coefficient

First Majestic  Aris Gold

Poor diversification

The 3 months correlation between First and Aris is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Aris Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Gold Corp 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 Aris Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Gold Corp has no effect on the direction of First Majestic i.e., First Majestic and Aris Gold go up and down completely randomly.

Pair Corralation between First Majestic and Aris Gold

Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Aris Gold. In addition to that, First Majestic is 1.02 times more volatile than Aris Gold Corp. It trades about -0.12 of its total potential returns per unit of risk. Aris Gold Corp is currently generating about -0.09 per unit of volatility. If you would invest  651.00  in Aris Gold Corp on October 24, 2024 and sell it today you would lose (117.00) from holding Aris Gold Corp or give up 17.97% of portfolio value over 90 days.

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

First Majestic Silver  vs.  Aris Gold Corp

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aris Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aris Gold Corp 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with First Majestic and Aris Gold

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

The idea behind First Majestic Silver and Aris Gold Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.