Correlation Between First Majestic and Bell Copper

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

Diversification Opportunities for First Majestic and Bell Copper

-0.52

Correlation Coefficient

First Majestic  Bell Copper

Excellent diversification

The 3 months correlation between First and Bell is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Bell Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Copper 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 Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper Corp has no effect on the direction of First Majestic i.e., First Majestic and Bell Copper go up and down completely randomly.

Pair Corralation between First Majestic and Bell Copper

Assuming the 90 days horizon First Majestic Silver is expected to generate 0.3 times more return on investment than Bell Copper. However, First Majestic Silver is 3.32 times less risky than Bell Copper. It trades about -0.06 of its potential returns per unit of risk. Bell Copper Corp is currently generating about -0.09 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

First Majestic Silver  vs.  Bell Copper Corp

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.

Bell Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bell Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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.

Pair Trading with First Majestic and Bell Copper

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

The idea behind First Majestic Silver and Bell Copper 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.