Correlation Between First Majestic and Target
Can any of the company-specific risk be diversified away by investing in both First Majestic and Target 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 Target 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 Target, you can compare the effects of market volatilities on First Majestic and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Target.
Diversification Opportunities for First Majestic and Target
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Target is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of First Majestic i.e., First Majestic and Target go up and down completely randomly.
Pair Corralation between First Majestic and Target
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.58 times more return on investment than Target. However, First Majestic Silver is 1.74 times less risky than Target. It trades about 0.2 of its potential returns per unit of risk. Target is currently generating about -0.22 per unit of risk. If you would invest 45,839 in First Majestic Silver on December 28, 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 Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Majestic Silver vs. Target
Performance |
Timeline |
First Majestic Silver |
Target |
First Majestic and Target Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Majestic and Target
The main advantage of trading using opposite First Majestic and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.First Majestic vs. Verizon Communications | First Majestic vs. Costco Wholesale | First Majestic vs. Cognizant Technology Solutions | First Majestic vs. McEwen Mining |
Target vs. Applied Materials | Target vs. Samsung Electronics Co | Target vs. Monster Beverage Corp | Target vs. Air Transport Services |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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