Correlation Between EnCore Energy and First Majestic
Can any of the company-specific risk be diversified away by investing in both EnCore Energy 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 EnCore Energy and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between enCore Energy Corp and First Majestic Silver, you can compare the effects of market volatilities on EnCore Energy 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 EnCore Energy with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnCore Energy and First Majestic.
Diversification Opportunities for EnCore Energy and First Majestic
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EnCore and First is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy 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 EnCore Energy 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 enCore Energy 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 EnCore Energy i.e., EnCore Energy and First Majestic go up and down completely randomly.
Pair Corralation between EnCore Energy and First Majestic
Allowing for the 90-day total investment horizon EnCore Energy is expected to generate 3.45 times less return on investment than First Majestic. But when comparing it to its historical volatility, enCore Energy Corp is 1.4 times less risky than First Majestic. It trades about 0.1 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 460.00 in First Majestic Silver on January 27, 2024 and sell it today you would earn a total of 234.00 from holding First Majestic Silver or generate 50.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
enCore Energy Corp vs. First Majestic Silver
Performance |
Timeline |
enCore Energy Corp |
First Majestic Silver |
EnCore Energy and First Majestic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EnCore Energy and First Majestic
The main advantage of trading using opposite EnCore Energy and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnCore Energy 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.EnCore Energy vs. Foremost Lithium Resource | EnCore Energy vs. Cameco Corp | EnCore Energy vs. Denison Mines Corp | EnCore Energy vs. Centrus Energy |
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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 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.
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