Correlation Between First Majestic and Capstone Mining

Can any of the company-specific risk be diversified away by investing in both First Majestic and Capstone Mining 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 Capstone Mining 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 Capstone Mining Corp, you can compare the effects of market volatilities on First Majestic and Capstone Mining 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 Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Capstone Mining.

Diversification Opportunities for First Majestic and Capstone Mining

0.77

Correlation Coefficient

First Majestic  Capstone Mining

Poor diversification

The 3 months correlation between First and Capstone is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp 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 Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of First Majestic i.e., First Majestic and Capstone Mining go up and down completely randomly.

Pair Corralation between First Majestic and Capstone Mining

Assuming the 90 days horizon First Majestic is expected to generate 1.01 times less return on investment than Capstone Mining. In addition to that, First Majestic is 1.52 times more volatile than Capstone Mining Corp. It trades about 0.12 of its total potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.18 per unit of volatility. If you would invest  589.00  in Capstone Mining Corp on April 20, 2025 and sell it today you would earn a total of  185.00  from holding Capstone Mining Corp or generate 31.41% return on investment over 90 days.

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

First Majestic Silver  vs.  Capstone Mining Corp

First Majestic Silver

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

Capstone Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Mining Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Capstone Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Capstone Mining

The main advantage of trading using opposite First Majestic and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Capstone Mining 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 Capstone Mining will offset losses from the drop in Capstone Mining's long position.

The idea behind First Majestic Silver and Capstone Mining Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.