Correlation Between First Majestic and Walmart

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

Diversification Opportunities for First Majestic and Walmart

0.17

Correlation Coefficient

First Majestic  Walmart

Average diversification

The 3 months correlation between First and Walmart is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of First Majestic i.e., First Majestic and Walmart go up and down completely randomly.

Pair Corralation between First Majestic and Walmart

Assuming the 90 days horizon First Majestic Silver is expected to generate 0.61 times more return on investment than Walmart. However, First Majestic Silver is 1.63 times less risky than Walmart. It trades about 0.18 of its potential returns per unit of risk. Walmart is currently generating about -0.03 per unit of risk. If you would invest  46,327  in First Majestic Silver on December 22, 2024 and sell it today you would earn a total of  5,812  from holding First Majestic Silver or generate 12.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Majestic Silver  vs.  Walmart

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 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, First Majestic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Walmart 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 Walmart

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

The idea behind First Majestic Silver and Walmart 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.