Correlation Between First Majestic and Endeavour Silver

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

Diversification Opportunities for First Majestic and Endeavour Silver

0.9

Correlation Coefficient

First Majestic  Endeavour Silver

Almost no diversification

The 3 months correlation between First and Endeavour is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Endeavour Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Silver Corp 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 Endeavour Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Silver Corp has no effect on the direction of First Majestic i.e., First Majestic and Endeavour Silver go up and down completely randomly.

Pair Corralation between First Majestic and Endeavour Silver

Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Endeavour Silver. In addition to that, First Majestic is 1.19 times more volatile than Endeavour Silver Corp. It trades about -0.2 of its total potential returns per unit of risk. Endeavour Silver Corp is currently generating about -0.21 per unit of volatility. If you would invest  425.00  in Endeavour Silver Corp on October 8, 2024 and sell it today you would lose (46.00) from holding Endeavour Silver Corp or give up 10.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

First Majestic Silver  vs.  Endeavour Silver Corp

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Endeavour Silver Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Endeavour Silver may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with First Majestic and Endeavour Silver

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

The idea behind First Majestic Silver and Endeavour Silver Corp 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.