Correlation Between Ufp Industries and First Majestic

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

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

Diversification Opportunities for Ufp Industries and First Majestic

-0.35

Correlation Coefficient

Ufp Industries  First Majestic

Very good diversification

The 3 months correlation between Ufp and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ufp Industries 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 Ufp Industries 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 Ufp Industries 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 Ufp Industries i.e., Ufp Industries and First Majestic go up and down completely randomly.

Pair Corralation between Ufp Industries and First Majestic

Given the investment horizon of 90 days Ufp Industries is expected to under-perform the First Majestic. But the stock apears to be less risky and, when comparing its historical volatility, Ufp Industries is 2.64 times less risky than First Majestic. The stock trades about -0.02 of its potential returns per unit of risk. The First Majestic Silver is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  567.00  in First Majestic Silver on December 26, 2024 and sell it today you would earn a total of  112.00  from holding First Majestic Silver or generate 19.75% return on investment over 90 days.

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

Ufp Industries  vs.  First Majestic Silver

Ufp Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ufp Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Ufp Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

First Majestic Silver

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, First Majestic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ufp Industries and First Majestic

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

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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 Transaction History module to view history of all your transactions and understand their impact on performance.