Correlation Between Silver Grail and First Majestic

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

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

Diversification Opportunities for Silver Grail and First Majestic

0.71

Correlation Coefficient

Silver Grail  First Majestic

Poor diversification

The 3 months correlation between Silver and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Silver Grail Resources 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 Silver Grail 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 Silver Grail Resources 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 Silver Grail i.e., Silver Grail and First Majestic go up and down completely randomly.

Pair Corralation between Silver Grail and First Majestic

Assuming the 90 days horizon Silver Grail Resources is expected to under-perform the First Majestic. But the stock apears to be less risky and, when comparing its historical volatility, Silver Grail Resources is 1.15 times less risky than First Majestic. The stock trades about -0.23 of its potential returns per unit of risk. The First Majestic Silver is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  908.00  in First Majestic Silver on October 11, 2024 and sell it today you would lose (63.00) from holding First Majestic Silver or give up 6.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Silver Grail Resources  vs.  First Majestic Silver

Silver Grail Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Grail Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Silver Grail is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Majestic Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First Majestic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Silver Grail and First Majestic

The main advantage of trading using opposite Silver Grail and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Grail 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 Silver Grail Resources 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.