Correlation Between First Majestic and Stella Jones

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

Diversification Opportunities for First Majestic and Stella Jones

0.71

Correlation Coefficient

First Majestic  Stella Jones

Poor diversification

The 3 months correlation between First and Stella is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones 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 Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of First Majestic i.e., First Majestic and Stella Jones go up and down completely randomly.

Pair Corralation between First Majestic and Stella Jones

Assuming the 90 days horizon First Majestic Silver is expected to generate 2.89 times more return on investment than Stella Jones. However, First Majestic is 2.89 times more volatile than Stella Jones. It trades about 0.16 of its potential returns per unit of risk. Stella Jones is currently generating about 0.24 per unit of risk. If you would invest  862.00  in First Majestic Silver on April 23, 2025 and sell it today you would earn a total of  343.00  from holding First Majestic Silver or generate 39.79% 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.  Stella Jones

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 unfluctuating basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

Stella Jones

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stella Jones are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Stella Jones displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Stella Jones

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

The idea behind First Majestic Silver and Stella Jones 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.