Correlation Between Coeur Mining and First Majestic
Can any of the company-specific risk be diversified away by investing in both Coeur Mining 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 Coeur Mining and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coeur Mining and First Majestic Silver, you can compare the effects of market volatilities on Coeur Mining 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 Coeur Mining with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coeur Mining and First Majestic.
Diversification Opportunities for Coeur Mining and First Majestic
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Coeur and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Coeur Mining 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 Coeur Mining 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 Coeur Mining 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 Coeur Mining i.e., Coeur Mining and First Majestic go up and down completely randomly.
Pair Corralation between Coeur Mining and First Majestic
Considering the 90-day investment horizon Coeur Mining is expected to generate 1.22 times more return on investment than First Majestic. However, Coeur Mining is 1.22 times more volatile than First Majestic Silver. It trades about 0.2 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.16 per unit of risk. If you would invest 271.00 in Coeur Mining on January 26, 2024 and sell it today you would earn a total of 184.00 from holding Coeur Mining or generate 67.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coeur Mining vs. First Majestic Silver
Performance |
| Timeline |
| Coeur Mining |
| First Majestic Silver |
Coeur Mining and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coeur Mining and First Majestic
The main advantage of trading using opposite Coeur Mining and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coeur Mining 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 Coeur Mining 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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