Correlation Between Americas Gold and First Majestic

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

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

Diversification Opportunities for Americas Gold and First Majestic

0.53

Correlation Coefficient

Americas Gold  First Majestic

Very weak diversification

The 3 months correlation between Americas and First is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Americas Gold and 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 Americas Gold 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 Americas Gold and 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 Americas Gold i.e., Americas Gold and First Majestic go up and down completely randomly.

Pair Corralation between Americas Gold and First Majestic

Assuming the 90 days trading horizon Americas Gold and is expected to generate 1.47 times more return on investment than First Majestic. However, Americas Gold is 1.47 times more volatile than First Majestic Silver. It trades about 0.26 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.13 per unit of risk. If you would invest  38.00  in Americas Gold and on October 23, 2024 and sell it today you would earn a total of  9.00  from holding Americas Gold and or generate 23.68% return on investment over 90 days.

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

Americas Gold and  vs.  First Majestic Silver

Americas Gold

Risk-Adjusted Performance

2 of 100

Weak

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

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Americas Gold and First Majestic

The main advantage of trading using opposite Americas Gold and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americas Gold 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 Americas Gold and 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.