Correlation Between First Majestic and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both First Majestic and Gerdau SA 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 Gerdau SA 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 Gerdau SA ADR, you can compare the effects of market volatilities on First Majestic and Gerdau SA 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 Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Gerdau SA.
Diversification Opportunities for First Majestic and Gerdau SA
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Gerdau is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR 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 Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA ADR has no effect on the direction of First Majestic i.e., First Majestic and Gerdau SA go up and down completely randomly.
Pair Corralation between First Majestic and Gerdau SA
Allowing for the 90-day total investment horizon First Majestic is expected to generate 7.4 times less return on investment than Gerdau SA. In addition to that, First Majestic is 2.01 times more volatile than Gerdau SA ADR. It trades about 0.01 of its total potential returns per unit of risk. Gerdau SA ADR is currently generating about 0.1 per unit of volatility. If you would invest 284.00 in Gerdau SA ADR on November 9, 2024 and sell it today you would earn a total of 11.00 from holding Gerdau SA ADR or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Gerdau SA ADR
Performance |
| Timeline |
| First Majestic Silver |
| Gerdau SA ADR |
First Majestic and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Gerdau SA
The main advantage of trading using opposite First Majestic and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Gerdau SA 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 Gerdau SA will offset losses from the drop in Gerdau SA's long position.| First Majestic vs. Aya Gold Silver | First Majestic vs. Silvercorp Metals | First Majestic vs. Discovery Metals Corp | First Majestic vs. Bald Eagle Gold |
| Gerdau SA vs. Usinas Siderurgicas de | Gerdau SA vs. Ternium SA ADR | Gerdau SA vs. ArcelorMittal SA ADR | Gerdau SA vs. POSCO 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |