Correlation Between First Majestic and EMX Royalty

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

Diversification Opportunities for First Majestic and EMX Royalty

0.82

Correlation Coefficient

First Majestic  EMX Royalty

Very poor diversification

The 3 months correlation between First and EMX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and EMX Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMX Royalty 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 EMX Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMX Royalty Corp has no effect on the direction of First Majestic i.e., First Majestic and EMX Royalty go up and down completely randomly.

Pair Corralation between First Majestic and EMX Royalty

Assuming the 90 days horizon First Majestic is expected to generate 1.07 times less return on investment than EMX Royalty. In addition to that, First Majestic is 1.46 times more volatile than EMX Royalty Corp. It trades about 0.12 of its total potential returns per unit of risk. EMX Royalty Corp is currently generating about 0.18 per unit of volatility. If you would invest  300.00  in EMX Royalty Corp on April 21, 2025 and sell it today you would earn a total of  101.00  from holding EMX Royalty Corp or generate 33.67% return on investment over 90 days.

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

First Majestic Silver  vs.  EMX Royalty 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 abnormal basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

EMX Royalty Corp

Risk-Adjusted Performance

Good

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

Pair Trading with First Majestic and EMX Royalty

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

The idea behind First Majestic Silver and EMX Royalty 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.