Correlation Between First Majestic and Lyxor Treasury

Can any of the company-specific risk be diversified away by investing in both First Majestic and Lyxor Treasury 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 Lyxor Treasury 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 Lyxor Treasury 3 7Y, you can compare the effects of market volatilities on First Majestic and Lyxor Treasury 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 Lyxor Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Lyxor Treasury.

Diversification Opportunities for First Majestic and Lyxor Treasury

0.48

Correlation Coefficient

First Majestic  Lyxor Treasury

Very weak diversification

The 3 months correlation between First and Lyxor is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Lyxor Treasury 3 7Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Treasury 3 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 Lyxor Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Treasury 3 has no effect on the direction of First Majestic i.e., First Majestic and Lyxor Treasury go up and down completely randomly.

Pair Corralation between First Majestic and Lyxor Treasury

Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 16.17 times more return on investment than Lyxor Treasury. However, First Majestic is 16.17 times more volatile than Lyxor Treasury 3 7Y. It trades about 0.11 of its potential returns per unit of risk. Lyxor Treasury 3 7Y is currently generating about 0.16 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 Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

First Majestic Silver  vs.  Lyxor Treasury 3 7Y

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.

Lyxor Treasury 3

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor Treasury 3 7Y are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lyxor Treasury is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Majestic and Lyxor Treasury

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

The idea behind First Majestic Silver and Lyxor Treasury 3 7Y 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 CEOs Directory module to screen CEOs from public companies around the world.