Correlation Between InPlay Oil and First Majestic

Can any of the company-specific risk be diversified away by investing in both InPlay Oil and First Majestic 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 InPlay Oil and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between InPlay Oil Corp and First Majestic Silver, you can compare the effects of market volatilities on InPlay Oil and First Majestic 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 InPlay Oil with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and First Majestic.

Diversification Opportunities for InPlay Oil and First Majestic

0.83

Correlation Coefficient

InPlay Oil  First Majestic

Very poor diversification

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

Pair Corralation between InPlay Oil and First Majestic

Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 0.72 times more return on investment than First Majestic. However, InPlay Oil Corp is 1.38 times less risky than First Majestic. It trades about 0.2 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.12 per unit of risk. If you would invest  722.00  in InPlay Oil Corp on April 21, 2025 and sell it today you would earn a total of  290.00  from holding InPlay Oil Corp or generate 40.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

InPlay Oil Corp  vs.  First Majestic Silver

InPlay Oil Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in InPlay Oil Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, InPlay Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with InPlay Oil and First Majestic

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

The idea behind InPlay Oil Corp and First Majestic Silver 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.