Correlation Between First Majestic and Integra Resources

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

Diversification Opportunities for First Majestic and Integra Resources

0.89

Correlation Coefficient

First Majestic  Integra Resources

Very poor diversification

The 3 months correlation between First and Integra is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Integra Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra Resources 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 Integra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra Resources Corp has no effect on the direction of First Majestic i.e., First Majestic and Integra Resources go up and down completely randomly.

Pair Corralation between First Majestic and Integra Resources

Assuming the 90 days horizon First Majestic Silver is expected to generate 1.3 times more return on investment than Integra Resources. However, First Majestic is 1.3 times more volatile than Integra Resources Corp. It trades about 0.08 of its potential returns per unit of risk. Integra Resources Corp is currently generating about 0.03 per unit of risk. If you would invest  713.00  in First Majestic Silver on September 4, 2024 and sell it today you would earn a total of  122.00  from holding First Majestic Silver or generate 17.11% return on investment over 90 days.

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

First Majestic Silver  vs.  Integra Resources Corp

First Majestic Silver

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 6 (%) 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.

Integra Resources Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Integra Resources Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Integra Resources is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Majestic and Integra Resources

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

The idea behind First Majestic Silver and Integra Resources 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.