Correlation Between First Majestic and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both First Majestic and Cairn Homes 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 Cairn Homes 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 Cairn Homes PLC, you can compare the effects of market volatilities on First Majestic and Cairn Homes 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 Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Cairn Homes.
Diversification Opportunities for First Majestic and Cairn Homes
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Cairn is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC 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 Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of First Majestic i.e., First Majestic and Cairn Homes go up and down completely randomly.
Pair Corralation between First Majestic and Cairn Homes
Assuming the 90 days trading horizon First Majestic Silver is expected to generate 2.26 times more return on investment than Cairn Homes. However, First Majestic is 2.26 times more volatile than Cairn Homes PLC. It trades about 0.05 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.05 per unit of risk. If you would invest 829.00 in First Majestic Silver on November 7, 2024 and sell it today you would earn a total of 22.00 from holding First Majestic Silver or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Cairn Homes PLC
Performance |
| Timeline |
| First Majestic Silver |
| Cairn Homes PLC |
First Majestic and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Cairn Homes
The main advantage of trading using opposite First Majestic and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| First Majestic vs. Zurich Insurance Group | First Majestic vs. Host Hotels Resorts | First Majestic vs. Nordea Bank Abp | First Majestic vs. Monster Beverage Corp |
| Cairn Homes vs. Fair Oaks Income | Cairn Homes vs. Infrastrutture Wireless Italiane | Cairn Homes vs. Charter Communications Cl | Cairn Homes vs. Wizz Air Holdings |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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