Correlation Between First Majestic and New Residential
Can any of the company-specific risk be diversified away by investing in both First Majestic and New Residential 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 New Residential 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 New Residential Investment, you can compare the effects of market volatilities on First Majestic and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and New Residential.
Diversification Opportunities for First Majestic and New Residential
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and New is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of First Majestic i.e., First Majestic and New Residential go up and down completely randomly.
Pair Corralation between First Majestic and New Residential
Assuming the 90 days trading horizon First Majestic is expected to generate 2.45 times less return on investment than New Residential. In addition to that, First Majestic is 1.54 times more volatile than New Residential Investment. It trades about 0.01 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.04 per unit of volatility. If you would invest 782.00 in New Residential Investment on November 2, 2024 and sell it today you would earn a total of 378.00 from holding New Residential Investment or generate 48.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. New Residential Investment
Performance |
| Timeline |
| First Majestic Silver |
| New Residential Inve |
First Majestic and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and New Residential
The main advantage of trading using opposite First Majestic and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| First Majestic vs. Samsung Electronics Co | First Majestic vs. Samsung Electronics Co | First Majestic vs. Toyota Motor Corp | First Majestic vs. SoftBank Group Corp |
| New Residential vs. MyHealthChecked Plc | New Residential vs. Gamma Communications PLC | New Residential vs. CVS Health Corp | New Residential vs. Planet Fitness Cl |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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