Correlation Between First Majestic and Freegold Ventures

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

Diversification Opportunities for First Majestic and Freegold Ventures

0.83

Correlation Coefficient

First Majestic  Freegold Ventures

Very poor diversification

The 3 months correlation between First and Freegold is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Freegold Ventures Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freegold Ventures 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 Freegold Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freegold Ventures has no effect on the direction of First Majestic i.e., First Majestic and Freegold Ventures go up and down completely randomly.

Pair Corralation between First Majestic and Freegold Ventures

Assuming the 90 days horizon First Majestic Silver is expected to generate 1.0 times more return on investment than Freegold Ventures. However, First Majestic is 1.0 times more volatile than Freegold Ventures Limited. It trades about 0.22 of its potential returns per unit of risk. Freegold Ventures Limited is currently generating about 0.15 per unit of risk. If you would invest  814.00  in First Majestic Silver on April 22, 2025 and sell it today you would earn a total of  323.00  from holding First Majestic Silver or generate 39.68% 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.  Freegold Ventures Limited

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 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

Freegold Ventures

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Freegold Ventures Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Freegold Ventures displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Freegold Ventures

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

The idea behind First Majestic Silver and Freegold Ventures Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.