Correlation Between Volkswagen and First Majestic
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and First Majestic Silver, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and First Majestic.
Diversification Opportunities for Volkswagen and First Majestic
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Volkswagen and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 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 Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and First Majestic go up and down completely randomly.
Pair Corralation between Volkswagen and First Majestic
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the First Majestic. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 2.31 times less risky than First Majestic. The stock trades about -0.04 of its potential returns per unit of risk. The First Majestic Silver is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,013 in First Majestic Silver on October 26, 2024 and sell it today you would lose (206.00) from holding First Majestic Silver or give up 20.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Volkswagen AG vs. First Majestic Silver
Performance |
| Timeline |
| Volkswagen AG |
| First Majestic Silver |
Volkswagen and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and First Majestic
The main advantage of trading using opposite Volkswagen and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. GreenX Metals | Volkswagen vs. Infrastrutture Wireless Italiane | Volkswagen vs. European Metals Holdings | Volkswagen vs. Europa Metals |
| First Majestic vs. Axway Software SA | First Majestic vs. UNIQA Insurance Group | First Majestic vs. Moneta Money Bank | First Majestic vs. Sparebank 1 SR |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |