Correlation Between National Bank and First Majestic

Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Bank of and First Majestic Silver, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and First Majestic.

Diversification Opportunities for National Bank and First Majestic

-0.44

Correlation Coefficient

National Bank  First Majestic

Very good diversification

The 3 months correlation between National and First is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of 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 National Bank 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 National Bank of 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 National Bank i.e., National Bank and First Majestic go up and down completely randomly.

Pair Corralation between National Bank and First Majestic

Assuming the 90 days trading horizon National Bank of is expected to generate 0.01 times more return on investment than First Majestic. However, National Bank of is 174.94 times less risky than First Majestic. It trades about 0.68 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.08 per unit of risk. If you would invest  2,496  in National Bank of on December 4, 2024 and sell it today you would earn a total of  4.00  from holding National Bank of or generate 0.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	57.14%
Values	Daily Returns

National Bank of  vs.  First Majestic Silver

National Bank

Risk-Adjusted Performance

OK

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

First Majestic Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with National Bank and First Majestic

The main advantage of trading using opposite National Bank and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.

The idea behind National Bank of and First Majestic Silver 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.