Correlation Between Avino Silver and First Majestic

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Can any of the company-specific risk be diversified away by investing in both Avino Silver 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 Avino Silver and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avino Silver Gold and First Majestic Silver, you can compare the effects of market volatilities on Avino Silver 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 Avino Silver with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avino Silver and First Majestic.

Diversification Opportunities for Avino Silver and First Majestic

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Avino and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Avino Silver Gold 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 Avino Silver 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 Avino Silver Gold 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 Avino Silver i.e., Avino Silver and First Majestic go up and down completely randomly.

Pair Corralation between Avino Silver and First Majestic

Considering the 90-day investment horizon Avino Silver Gold is expected to generate 0.93 times more return on investment than First Majestic. However, Avino Silver Gold is 1.08 times less risky than First Majestic. It trades about -0.05 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.11 per unit of risk. If you would invest  79.00  in Avino Silver Gold on February 22, 2022 and sell it today you would lose (12.00)  from holding Avino Silver Gold or give up 15.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Avino Silver Gold  vs.  First Majestic Silver

 Performance (%) 
      Timeline 
Avino Silver Gold 
Avino Performance
0 of 100
Over the last 90 days Avino Silver Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Avino Price Channel

First Majestic Silver 
First Performance
0 of 100
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 sluggish performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

First Price Channel

Avino Silver and First Majestic Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Avino Silver and First Majestic

The main advantage of trading using opposite Avino Silver and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avino Silver 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 Avino Silver Gold 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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