Correlation Between First Majestic and 5N Plus
Can any of the company-specific risk be diversified away by investing in both First Majestic and 5N Plus 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 5N Plus 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 5N Plus, you can compare the effects of market volatilities on First Majestic and 5N Plus 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 5N Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and 5N Plus.
Diversification Opportunities for First Majestic and 5N Plus
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and VNP is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and 5N Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5N Plus 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 5N Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5N Plus has no effect on the direction of First Majestic i.e., First Majestic and 5N Plus go up and down completely randomly.
Pair Corralation between First Majestic and 5N Plus
Assuming the 90 days horizon First Majestic is expected to generate 2.32 times less return on investment than 5N Plus. In addition to that, First Majestic is 1.48 times more volatile than 5N Plus. It trades about 0.12 of its total potential returns per unit of risk. 5N Plus is currently generating about 0.4 per unit of volatility. If you would invest 585.00 in 5N Plus on April 21, 2025 and sell it today you would earn a total of 538.00 from holding 5N Plus or generate 91.97% 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. 5N Plus
Performance |
Timeline |
First Majestic Silver |
5N Plus |
First Majestic and 5N Plus Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Majestic and 5N Plus
The main advantage of trading using opposite First Majestic and 5N Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, 5N Plus 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 5N Plus will offset losses from the drop in 5N Plus' long position.First Majestic vs. Northstar Clean Technologies | First Majestic vs. Thunderbird Entertainment Group | First Majestic vs. Quorum Information Technologies | First Majestic vs. Broadcom |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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