Correlation Between First Majestic and Blackrock Midcap

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

Diversification Opportunities for First Majestic and Blackrock Midcap

-0.52

Correlation Coefficient

First Majestic  Blackrock Midcap

Excellent diversification

The 3 months correlation between First and Blackrock is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Blackrock Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Midcap Index 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 Blackrock Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Midcap Index has no effect on the direction of First Majestic i.e., First Majestic and Blackrock Midcap go up and down completely randomly.

Pair Corralation between First Majestic and Blackrock Midcap

Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 3.92 times more return on investment than Blackrock Midcap. However, First Majestic is 3.92 times more volatile than Blackrock Midcap Index. It trades about 0.11 of its potential returns per unit of risk. Blackrock Midcap Index is currently generating about -0.04 per unit of risk. If you would invest  567.00  in First Majestic Silver on December 25, 2024 and sell it today you would earn a total of  131.00  from holding First Majestic Silver or generate 23.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

First Majestic Silver  vs.  Blackrock Midcap Index

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 8 (%) 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.

Blackrock Midcap Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Midcap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Blackrock Midcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Majestic and Blackrock Midcap

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

The idea behind First Majestic Silver and Blackrock Midcap Index 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .