Correlation Between MAG Silver and First Majestic

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

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

Diversification Opportunities for MAG Silver and First Majestic

0.94

Correlation Coefficient

MAG Silver  First Majestic

Almost no diversification

The 3 months correlation between MAG and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding MAG Silver 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 MAG Silver 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 MAG Silver 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 MAG Silver i.e., MAG Silver and First Majestic go up and down completely randomly.

Pair Corralation between MAG Silver and First Majestic

Considering the 90-day investment horizon MAG Silver Corp is expected to generate 0.72 times more return on investment than First Majestic. However, MAG Silver Corp is 1.38 times less risky than First Majestic. It trades about 0.27 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.15 per unit of risk. If you would invest  1,080  in MAG Silver Corp on January 30, 2024 and sell it today you would earn a total of  216.00  from holding MAG Silver Corp or generate 20.0% return on investment over 90 days.

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

MAG Silver Corp  vs.  First Majestic Silver

MAG Silver Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MAG Silver Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MAG Silver reported solid returns over the last few months and may actually be approaching a breakup point.

First Majestic Silver

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, First Majestic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAG Silver and First Majestic

The main advantage of trading using opposite MAG Silver and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG Silver 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 MAG Silver 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.