Correlation Between First Majestic and Tree Island
Can any of the company-specific risk be diversified away by investing in both First Majestic and Tree Island 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 Tree Island 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 Tree Island Steel, you can compare the effects of market volatilities on First Majestic and Tree Island 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 Tree Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Tree Island.
Diversification Opportunities for First Majestic and Tree Island
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Tree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel 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 Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of First Majestic i.e., First Majestic and Tree Island go up and down completely randomly.
Pair Corralation between First Majestic and Tree Island
Assuming the 90 days horizon First Majestic Silver is expected to generate 2.32 times more return on investment than Tree Island. However, First Majestic is 2.32 times more volatile than Tree Island Steel. It trades about 0.22 of its potential returns per unit of risk. Tree Island Steel is currently generating about 0.06 per unit of risk. If you would invest 1,190 in First Majestic Silver on July 20, 2025 and sell it today you would earn a total of 777.00 from holding First Majestic Silver or generate 65.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Tree Island Steel
Performance |
| Timeline |
| First Majestic Silver |
| Tree Island Steel |
First Majestic and Tree Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Tree Island
The main advantage of trading using opposite First Majestic and Tree Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Tree Island 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 Tree Island will offset losses from the drop in Tree Island's long position.| First Majestic vs. HudBay Minerals | First Majestic vs. Capstone Mining Corp | First Majestic vs. Triple Flag Precious | First Majestic vs. B2Gold Corp |
| Tree Island vs. American Manganese | Tree Island vs. Nickel 28 Capital | Tree Island vs. NevGold Corp | Tree Island vs. Nevada King Gold |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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