Correlation Between First Majestic and Meta Platforms

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

Diversification Opportunities for First Majestic and Meta Platforms

-0.37

Correlation Coefficient

First Majestic  Meta Platforms

Very good diversification

The 3 months correlation between First and Meta is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Meta Platforms CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms CDR 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms CDR has no effect on the direction of First Majestic i.e., First Majestic and Meta Platforms go up and down completely randomly.

Pair Corralation between First Majestic and Meta Platforms

Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 1.96 times more return on investment than Meta Platforms. However, First Majestic is 1.96 times more volatile than Meta Platforms CDR. It trades about 0.1 of its potential returns per unit of risk. Meta Platforms CDR is currently generating about 0.04 per unit of risk. If you would invest  567.00  in First Majestic Silver on December 26, 2024 and sell it today you would earn a total of  122.00  from holding First Majestic Silver or generate 21.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

First Majestic Silver  vs.  Meta Platforms CDR

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 7 (%) 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.

Meta Platforms CDR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms CDR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Meta Platforms is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First Majestic and Meta Platforms

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

The idea behind First Majestic Silver and Meta Platforms CDR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.