Correlation Between First Majestic and Avino Silver
Can any of the company-specific risk be diversified away by investing in both First Majestic and Avino Silver 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 Avino Silver 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 Avino Silver Gold, you can compare the effects of market volatilities on First Majestic and Avino Silver 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 Avino Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Avino Silver.
Diversification Opportunities for First Majestic and Avino Silver
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Avino is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Avino Silver Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avino Silver Gold 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 Avino Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avino Silver Gold has no effect on the direction of First Majestic i.e., First Majestic and Avino Silver go up and down completely randomly.
Pair Corralation between First Majestic and Avino Silver
Allowing for the 90-day total investment horizon First Majestic is expected to generate 10.64 times less return on investment than Avino Silver. In addition to that, First Majestic is 1.11 times more volatile than Avino Silver Gold. It trades about 0.0 of its total potential returns per unit of risk. Avino Silver Gold is currently generating about 0.02 per unit of volatility. If you would invest 70.00 in Avino Silver Gold on January 26, 2024 and sell it today you would earn a total of 2.00 from holding Avino Silver Gold or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
First Majestic Silver vs. Avino Silver Gold
Performance |
| Timeline |
| First Majestic Silver |
| Avino Silver Gold |
First Majestic and Avino Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Avino Silver
The main advantage of trading using opposite First Majestic and Avino Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Avino Silver 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 Avino Silver will offset losses from the drop in Avino Silver's long position.The idea behind First Majestic Silver and Avino Silver Gold 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.| Avino Silver vs. Endeavour Silver Corp | Avino Silver vs. Fortuna Silver Mines | Avino Silver vs. Impala Platinum Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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