Correlation Between First American and Monarca Minerals

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

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

Diversification Opportunities for First American and Monarca Minerals

0.0

Correlation Coefficient

First American  Monarca Minerals

Pay attention - limited upside

The 3 months correlation between First and Monarca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First American Silver and Monarca Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarca Minerals and First American 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 American Silver are associated (or correlated) with Monarca Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarca Minerals has no effect on the direction of First American i.e., First American and Monarca Minerals go up and down completely randomly.

Pair Corralation between First American and Monarca Minerals

If you would invest  0.35  in Monarca Minerals on December 28, 2024 and sell it today you would earn a total of  0.37  from holding Monarca Minerals or generate 105.71% return on investment over 90 days.

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

First American Silver  vs.  Monarca Minerals

First American Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days First American Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, First American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Monarca Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monarca Minerals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Monarca Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First American and Monarca Minerals

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

The idea behind First American Silver and Monarca Minerals 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.