Correlation Between Grupo Hotelero and First Majestic
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero and First Majestic 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 Grupo Hotelero and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Hotelero Santa and First Majestic Silver, you can compare the effects of market volatilities on Grupo Hotelero and First Majestic 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 Grupo Hotelero with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and First Majestic.
Diversification Opportunities for Grupo Hotelero and First Majestic
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and First is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Grupo Hotelero 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 Grupo Hotelero Santa are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and First Majestic go up and down completely randomly.
Pair Corralation between Grupo Hotelero and First Majestic
Assuming the 90 days trading horizon Grupo Hotelero Santa is expected to under-perform the First Majestic. In addition to that, Grupo Hotelero is 2.03 times more volatile than First Majestic Silver. It trades about -0.04 of its total potential returns per unit of risk. First Majestic Silver is currently generating about 0.09 per unit of volatility. If you would invest 47,449 in First Majestic Silver on December 1, 2024 and sell it today you would earn a total of 2,524 from holding First Majestic Silver or generate 5.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Grupo Hotelero Santa vs. First Majestic Silver
Performance |
Timeline |
Grupo Hotelero Santa |
First Majestic Silver |
Grupo Hotelero and First Majestic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grupo Hotelero and First Majestic
The main advantage of trading using opposite Grupo Hotelero and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.Grupo Hotelero vs. UnitedHealth Group Incorporated | Grupo Hotelero vs. CVS Health | Grupo Hotelero vs. Micron Technology | Grupo Hotelero vs. Capital One Financial |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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