Correlation Between First Majestic and EJF Investments
Can any of the company-specific risk be diversified away by investing in both First Majestic and EJF Investments 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 EJF Investments 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 EJF Investments, you can compare the effects of market volatilities on First Majestic and EJF Investments 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 EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and EJF Investments.
Diversification Opportunities for First Majestic and EJF Investments
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and EJF is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of First Majestic i.e., First Majestic and EJF Investments go up and down completely randomly.
Pair Corralation between First Majestic and EJF Investments
Assuming the 90 days trading horizon First Majestic Silver is expected to generate 2.47 times more return on investment than EJF Investments. However, First Majestic is 2.47 times more volatile than EJF Investments. It trades about 0.06 of its potential returns per unit of risk. EJF Investments is currently generating about 0.14 per unit of risk. If you would invest 718.00 in First Majestic Silver on November 2, 2024 and sell it today you would earn a total of 134.00 from holding First Majestic Silver or generate 18.66% 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. EJF Investments
Performance |
| Timeline |
| First Majestic Silver |
| EJF Investments |
First Majestic and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and EJF Investments
The main advantage of trading using opposite First Majestic and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' long position.| First Majestic vs. Live Nation Entertainment | First Majestic vs. Flutter Entertainment PLC | First Majestic vs. Morgan Advanced Materials | First Majestic vs. G5 Entertainment AB |
| EJF Investments vs. SupplyMe Capital PLC | EJF Investments vs. Premier African Minerals | EJF Investments vs. SANTANDER UK 8 | EJF Investments vs. Tower Resources plc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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