Correlation Between First Majestic and Murchison Minerals

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

Diversification Opportunities for First Majestic and Murchison Minerals

0.7

Correlation Coefficient

First Majestic  Murchison Minerals

Poor diversification

The 3 months correlation between First and Murchison is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Murchison Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murchison Minerals 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 Murchison Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murchison Minerals has no effect on the direction of First Majestic i.e., First Majestic and Murchison Minerals go up and down completely randomly.

Pair Corralation between First Majestic and Murchison Minerals

Assuming the 90 days horizon First Majestic is expected to generate 29.5 times less return on investment than Murchison Minerals. But when comparing it to its historical volatility, First Majestic Silver is 32.48 times less risky than Murchison Minerals. It trades about 0.16 of its potential returns per unit of risk. Murchison Minerals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Murchison Minerals on April 24, 2025 and sell it today you would earn a total of  20.00  from holding Murchison Minerals or generate 2000.0% 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.  Murchison Minerals

First Majestic Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 12 (%) 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.

Murchison Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Murchison Minerals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Murchison Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Murchison Minerals

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

The idea behind First Majestic Silver and Murchison Minerals 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.