Correlation Between First Majestic and Southern Copper
Can any of the company-specific risk be diversified away by investing in both First Majestic and Southern Copper 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 Southern Copper 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 Southern Copper, you can compare the effects of market volatilities on First Majestic and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Southern Copper.
Diversification Opportunities for First Majestic and Southern Copper
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Southern is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of First Majestic i.e., First Majestic and Southern Copper go up and down completely randomly.
Pair Corralation between First Majestic and Southern Copper
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Southern Copper. In addition to that, First Majestic is 1.55 times more volatile than Southern Copper. It trades about -0.32 of its total potential returns per unit of risk. Southern Copper is currently generating about 0.22 per unit of volatility. If you would invest 210,190 in Southern Copper on September 26, 2024 and sell it today you would earn a total of 4,810 from holding Southern Copper or generate 2.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Majestic Silver vs. Southern Copper
Performance |
Timeline |
First Majestic Silver |
Southern Copper |
First Majestic and Southern Copper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Majestic and Southern Copper
The main advantage of trading using opposite First Majestic and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.First Majestic vs. McEwen Mining | First Majestic vs. Costco Wholesale | First Majestic vs. Micron Technology | First Majestic vs. The Bank of |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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