Correlation Between First Majestic and Silver Tiger

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

Diversification Opportunities for First Majestic and Silver Tiger

0.83

Correlation Coefficient

First Majestic  Silver Tiger

Very poor diversification

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

Pair Corralation between First Majestic and Silver Tiger

Assuming the 90 days horizon First Majestic is expected to generate 2.22 times less return on investment than Silver Tiger. But when comparing it to its historical volatility, First Majestic Silver is 1.36 times less risky than Silver Tiger. It trades about 0.16 of its potential returns per unit of risk. Silver Tiger Metals is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Silver Tiger Metals on April 22, 2025 and sell it today you would earn a total of  35.00  from holding Silver Tiger Metals or generate 116.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

First Majestic Silver  vs.  Silver Tiger Metals

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.

Silver Tiger Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Tiger Metals are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Silver Tiger showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Silver Tiger

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

The idea behind First Majestic Silver and Silver Tiger Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.