Correlation Between First Majestic and Acadian Timber
Can any of the company-specific risk be diversified away by investing in both First Majestic and Acadian Timber 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 Acadian Timber 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 Acadian Timber Corp, you can compare the effects of market volatilities on First Majestic and Acadian Timber 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 Acadian Timber. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Acadian Timber.
Diversification Opportunities for First Majestic and Acadian Timber
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Acadian is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Acadian Timber Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadian Timber Corp 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 Acadian Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadian Timber Corp has no effect on the direction of First Majestic i.e., First Majestic and Acadian Timber go up and down completely randomly.
Pair Corralation between First Majestic and Acadian Timber
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Acadian Timber. In addition to that, First Majestic is 2.53 times more volatile than Acadian Timber Corp. It trades about -0.32 of its total potential returns per unit of risk. Acadian Timber Corp is currently generating about -0.16 per unit of volatility. If you would invest 1,837 in Acadian Timber Corp on August 25, 2024 and sell it today you would lose (72.00) from holding Acadian Timber Corp or give up 3.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Acadian Timber Corp
Performance |
| Timeline |
| First Majestic Silver |
| Acadian Timber Corp |
First Majestic and Acadian Timber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Acadian Timber
The main advantage of trading using opposite First Majestic and Acadian Timber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Acadian Timber 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 Acadian Timber will offset losses from the drop in Acadian Timber's long position.| First Majestic vs. Canadian General Investments | First Majestic vs. 2028 Investment Grade | First Majestic vs. Brookfield Investments | First Majestic vs. Upstart Investments |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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