Correlation Between First Majestic and Idaho Strategic

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

Diversification Opportunities for First Majestic and Idaho Strategic

0.66

Correlation Coefficient

First Majestic  Idaho Strategic

Poor diversification

The 3 months correlation between First and Idaho is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Idaho Strategic Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idaho Strategic 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 Idaho Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idaho Strategic Resources has no effect on the direction of First Majestic i.e., First Majestic and Idaho Strategic go up and down completely randomly.

Pair Corralation between First Majestic and Idaho Strategic

Allowing for the 90-day total investment horizon First Majestic Silver is expected to under-perform the Idaho Strategic. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 1.21 times less risky than Idaho Strategic. The stock trades about -0.23 of its potential returns per unit of risk. The Idaho Strategic Resources is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  1,219  in Idaho Strategic Resources on September 21, 2024 and sell it today you would lose (162.00) from holding Idaho Strategic Resources or give up 13.29% 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.  Idaho Strategic Resources

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 nearly stable technical and fundamental indicators, First Majestic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Idaho Strategic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idaho Strategic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with First Majestic and Idaho Strategic

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

The idea behind First Majestic Silver and Idaho Strategic 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.