Correlation Between First Majestic and REYNA SILVER

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

Diversification Opportunities for First Majestic and REYNA SILVER

0.77

Correlation Coefficient

First Majestic  REYNA SILVER

Poor diversification

The 3 months correlation between First and REYNA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and REYNA SILVER P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REYNA SILVER P 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 REYNA SILVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REYNA SILVER P has no effect on the direction of First Majestic i.e., First Majestic and REYNA SILVER go up and down completely randomly.

Pair Corralation between First Majestic and REYNA SILVER

Assuming the 90 days horizon First Majestic Silver is expected to under-perform the REYNA SILVER. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 2.64 times less risky than REYNA SILVER. The stock trades about -0.07 of its potential returns per unit of risk. The REYNA SILVER P is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  8.00  in REYNA SILVER P on October 6, 2024 and sell it today you would lose (1.84) from holding REYNA SILVER P or give up 23.0% 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.  REYNA SILVER P

First Majestic Silver

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, First Majestic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

REYNA SILVER P

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REYNA SILVER P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, REYNA SILVER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and REYNA SILVER

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

The idea behind First Majestic Silver and REYNA SILVER P 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.