Correlation Between First Majestic and Pacific Imperial

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

Diversification Opportunities for First Majestic and Pacific Imperial

0.34

Correlation Coefficient

First Majestic  Pacific Imperial

Weak diversification

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

Pair Corralation between First Majestic and Pacific Imperial

If you would invest  1.50  in Pacific Imperial Mines on December 1, 2024 and sell it today you would lose (1.00) from holding Pacific Imperial Mines or give up 66.67% of portfolio value over 90 days.

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

First Majestic Silver  vs.  Pacific Imperial Mines

First Majestic Silver

Risk-Adjusted Performance

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 very healthy basic indicators, First Majestic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pacific Imperial Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacific Imperial Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pacific Imperial is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Majestic and Pacific Imperial

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

The idea behind First Majestic Silver and Pacific Imperial Mines 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.