Correlation Between First Majestic and CBLT

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

Diversification Opportunities for First Majestic and CBLT

-0.23

Correlation Coefficient

First Majestic  CBLT

Very good diversification

The 3 months correlation between First and CBLT is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and CBLT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBLT Inc 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 CBLT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBLT Inc has no effect on the direction of First Majestic i.e., First Majestic and CBLT go up and down completely randomly.

Pair Corralation between First Majestic and CBLT

Assuming the 90 days horizon First Majestic is expected to generate 1.24 times less return on investment than CBLT. But when comparing it to its historical volatility, First Majestic Silver is 3.01 times less risky than CBLT. It trades about 0.12 of its potential returns per unit of risk. CBLT Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.50  in CBLT Inc on December 28, 2024 and sell it today you would earn a total of  0.00  from holding CBLT Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Majestic Silver  vs.  CBLT Inc

First Majestic Silver

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

CBLT Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CBLT Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, CBLT showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and CBLT

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

The idea behind First Majestic Silver and CBLT Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.