Correlation Between First Majestic and JPMorgan Chase

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

Diversification Opportunities for First Majestic and JPMorgan Chase

0.04

Correlation Coefficient

First Majestic  JPMorgan Chase

Significant diversification

The 3 months correlation between First and JPMorgan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase 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 JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of First Majestic i.e., First Majestic and JPMorgan Chase go up and down completely randomly.

Pair Corralation between First Majestic and JPMorgan Chase

Assuming the 90 days horizon First Majestic Silver is expected to generate 0.69 times more return on investment than JPMorgan Chase. However, First Majestic Silver is 1.45 times less risky than JPMorgan Chase. It trades about 0.2 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.01 per unit of risk. If you would invest  45,839  in First Majestic Silver on December 29, 2024 and sell it today you would earn a total of  6,390  from holding First Majestic Silver or generate 13.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

First Majestic Silver  vs.  JPMorgan Chase Co

First Majestic Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, First Majestic showed solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Chase

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, JPMorgan Chase 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 JPMorgan Chase

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

The idea behind First Majestic Silver and JPMorgan Chase Co 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.