Correlation Between First Majestic and RELIANCE GLOBAL

Can any of the company-specific risk be diversified away by investing in both First Majestic and RELIANCE GLOBAL 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 RELIANCE GLOBAL 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 RELIANCE GLOBAL GROUP, you can compare the effects of market volatilities on First Majestic and RELIANCE GLOBAL 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 RELIANCE GLOBAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and RELIANCE GLOBAL.

Diversification Opportunities for First Majestic and RELIANCE GLOBAL

0.04

Correlation Coefficient

First Majestic  RELIANCE GLOBAL

Significant diversification

The 3 months correlation between First and RELIANCE is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and RELIANCE GLOBAL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELIANCE GLOBAL GROUP 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 RELIANCE GLOBAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELIANCE GLOBAL GROUP has no effect on the direction of First Majestic i.e., First Majestic and RELIANCE GLOBAL go up and down completely randomly.

Pair Corralation between First Majestic and RELIANCE GLOBAL

Allowing for the 90-day total investment horizon First Majestic is expected to generate 33.29 times less return on investment than RELIANCE GLOBAL. But when comparing it to its historical volatility, First Majestic Silver is 13.5 times less risky than RELIANCE GLOBAL. It trades about 0.07 of its potential returns per unit of risk. RELIANCE GLOBAL GROUP is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2.24  in RELIANCE GLOBAL GROUP on January 29, 2025 and sell it today you would lose (0.40) from holding RELIANCE GLOBAL GROUP or give up 17.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	19.35%
Values	Daily Returns

First Majestic Silver  vs.  RELIANCE GLOBAL GROUP

First Majestic Silver

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 5 (%) 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.

RELIANCE GLOBAL GROUP

Risk-Adjusted Performance

Good

Over the last 90 days RELIANCE GLOBAL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal forward indicators, RELIANCE GLOBAL showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and RELIANCE GLOBAL

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

The idea behind First Majestic Silver and RELIANCE GLOBAL GROUP 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.