Correlation Between Rathdowney Resources and First Majestic

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

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

Diversification Opportunities for Rathdowney Resources and First Majestic

0.0

Correlation Coefficient

Rathdowney Resources  First Majestic

Pay attention - limited upside

The 3 months correlation between Rathdowney and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rathdowney Resources 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 Rathdowney Resources 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 Rathdowney Resources 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 Rathdowney Resources i.e., Rathdowney Resources and First Majestic go up and down completely randomly.

Pair Corralation between Rathdowney Resources and First Majestic

If you would invest  847.00  in First Majestic Silver on August 8, 2024 and sell it today you would earn a total of  66.00  from holding First Majestic Silver or generate 7.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Rathdowney Resources  vs.  First Majestic Silver

Rathdowney Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rathdowney Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Rathdowney Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Majestic Silver

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 11 (%) 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 Rathdowney Resources and First Majestic

The main advantage of trading using opposite Rathdowney Resources and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rathdowney Resources 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 Rathdowney Resources 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.