Correlation Between Canso Credit and First Majestic

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

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

Diversification Opportunities for Canso Credit and First Majestic

0.18

Correlation Coefficient

Canso Credit  First Majestic

Average diversification

The 3 months correlation between Canso and First is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust 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 Canso Credit 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 Canso Credit Trust 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 Canso Credit i.e., Canso Credit and First Majestic go up and down completely randomly.

Pair Corralation between Canso Credit and First Majestic

Assuming the 90 days trading horizon Canso Credit Trust is expected to generate 0.14 times more return on investment than First Majestic. However, Canso Credit Trust is 7.12 times less risky than First Majestic. It trades about 0.09 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.0 per unit of risk. If you would invest  1,275  in Canso Credit Trust on September 14, 2024 and sell it today you would earn a total of  303.00  from holding Canso Credit Trust or generate 23.76% return on investment over 90 days.

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

Canso Credit Trust  vs.  First Majestic Silver

Canso Credit Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Majestic Silver

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, First Majestic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Canso Credit and First Majestic

The main advantage of trading using opposite Canso Credit and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Credit 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 Canso Credit Trust 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.