Correlation Between Benton Resources and First Majestic

Can any of the company-specific risk be diversified away by investing in both Benton Resources and First Majestic 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 Benton Resources and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Benton Resources and First Majestic Silver, you can compare the effects of market volatilities on Benton Resources and First Majestic 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 Benton Resources with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benton Resources and First Majestic.

Diversification Opportunities for Benton Resources and First Majestic

-0.17

Correlation Coefficient

Benton Resources  First Majestic

Good diversification

The 3 months correlation between Benton and First is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Benton Resources and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Benton Resources 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 Benton Resources are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Benton Resources i.e., Benton Resources and First Majestic go up and down completely randomly.

Pair Corralation between Benton Resources and First Majestic

Assuming the 90 days horizon Benton Resources is expected to generate 1.63 times less return on investment than First Majestic. In addition to that, Benton Resources is 1.49 times more volatile than First Majestic Silver. It trades about 0.04 of its total potential returns per unit of risk. First Majestic Silver is currently generating about 0.11 per unit of volatility. If you would invest  776.00  in First Majestic Silver on December 28, 2024 and sell it today you would earn a total of  190.00  from holding First Majestic Silver or generate 24.48% return on investment over 90 days.

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

Benton Resources  vs.  First Majestic Silver

Benton Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benton Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Benton Resources showed solid returns over the last few months and may actually be approaching a breakup point.

First Majestic Silver

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 8 (%) 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.

Pair Trading with Benton Resources and First Majestic

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

The idea behind Benton Resources and First Majestic Silver 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.