Correlation Between First Majestic and Mirasol Resources

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

Diversification Opportunities for First Majestic and Mirasol Resources

-0.34

Correlation Coefficient

First Majestic  Mirasol Resources

Very good diversification

The 3 months correlation between First and Mirasol is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Mirasol Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirasol Resources 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 Mirasol Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirasol Resources has no effect on the direction of First Majestic i.e., First Majestic and Mirasol Resources go up and down completely randomly.

Pair Corralation between First Majestic and Mirasol Resources

Assuming the 90 days horizon First Majestic Silver is expected to generate 1.18 times more return on investment than Mirasol Resources. However, First Majestic is 1.18 times more volatile than Mirasol Resources. It trades about 0.16 of its potential returns per unit of risk. Mirasol Resources is currently generating about 0.02 per unit of risk. If you would invest  628.00  in First Majestic Silver on September 6, 2024 and sell it today you would earn a total of  255.00  from holding First Majestic Silver or generate 40.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

First Majestic Silver  vs.  Mirasol Resources

First Majestic Silver

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

Mirasol Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mirasol Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mirasol Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Majestic and Mirasol Resources

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

The idea behind First Majestic Silver and Mirasol Resources 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.