Correlation Between First American and Pure Energy

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

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

Diversification Opportunities for First American and Pure Energy

-0.02

Correlation Coefficient

First American  Pure Energy

Good diversification

The 3 months correlation between First and Pure is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding First American Silver and Pure Energy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Energy Minerals and First American 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 American Silver are associated (or correlated) with Pure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Energy Minerals has no effect on the direction of First American i.e., First American and Pure Energy go up and down completely randomly.

Pair Corralation between First American and Pure Energy

Given the investment horizon of 90 days First American Silver is expected to generate 25.08 times more return on investment than Pure Energy. However, First American is 25.08 times more volatile than Pure Energy Minerals. It trades about 0.11 of its potential returns per unit of risk. Pure Energy Minerals is currently generating about -0.06 per unit of risk. If you would invest  0.01  in First American Silver on May 27, 2025 and sell it today you would earn a total of  0.00  from holding First American Silver or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

First American Silver  vs.  Pure Energy Minerals

First American Silver

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First American Silver are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First American sustained solid returns over the last few months and may actually be approaching a breakup point.

Pure Energy Minerals

Risk-Adjusted Performance

Weakest

Over the last 90 days Pure Energy Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with First American and Pure Energy

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

The idea behind First American Silver and Pure Energy Minerals 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.