Correlation Between First Majestic and Enlightify

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

Diversification Opportunities for First Majestic and Enlightify

0.65

Correlation Coefficient

First Majestic  Enlightify

Poor diversification

The 3 months correlation between First and Enlightify is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Enlightify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlightify 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 Enlightify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlightify has no effect on the direction of First Majestic i.e., First Majestic and Enlightify go up and down completely randomly.

Pair Corralation between First Majestic and Enlightify

Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 0.74 times more return on investment than Enlightify. However, First Majestic Silver is 1.35 times less risky than Enlightify. It trades about -0.11 of its potential returns per unit of risk. Enlightify is currently generating about -0.19 per unit of risk. If you would invest  649.00  in First Majestic Silver on October 10, 2024 and sell it today you would lose (56.00) from holding First Majestic Silver or give up 8.63% 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.  Enlightify

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. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Enlightify

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlightify has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with First Majestic and Enlightify

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

The idea behind First Majestic Silver and Enlightify 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.