Correlation Between First Majestic and Gold Reserve
Can any of the company-specific risk be diversified away by investing in both First Majestic and Gold Reserve 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 Gold Reserve 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 Gold Reserve, you can compare the effects of market volatilities on First Majestic and Gold Reserve 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 Gold Reserve. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Gold Reserve.
Diversification Opportunities for First Majestic and Gold Reserve
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Gold is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Gold Reserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Reserve 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 Gold Reserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Reserve has no effect on the direction of First Majestic i.e., First Majestic and Gold Reserve go up and down completely randomly.
Pair Corralation between First Majestic and Gold Reserve
Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 3.47 times more return on investment than Gold Reserve. However, First Majestic is 3.47 times more volatile than Gold Reserve. It trades about 0.2 of its potential returns per unit of risk. Gold Reserve is currently generating about -0.04 per unit of risk. If you would invest 558.00 in First Majestic Silver on January 20, 2024 and sell it today you would earn a total of 119.00 from holding First Majestic Silver or generate 21.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Majestic Silver vs. Gold Reserve
Performance |
| Timeline |
| First Majestic Silver |
| Gold Reserve |
First Majestic and Gold Reserve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Gold Reserve
The main advantage of trading using opposite First Majestic and Gold Reserve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Gold Reserve 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 Gold Reserve will offset losses from the drop in Gold Reserve's long position.| First Majestic vs. Aya Gold Silver | First Majestic vs. Silvercorp Metals | First Majestic vs. Discovery Metals Corp | First Majestic vs. Santacruz Silv |
| Gold Reserve vs. Alumina Limited | Gold Reserve vs. HUMANA INC | Gold Reserve vs. Aquagold International | Gold Reserve vs. Spring Valley Acquisition |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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