Correlation Between Baxter International and First Majestic
Can any of the company-specific risk be diversified away by investing in both Baxter International and First Majestic 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 Baxter International and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and First Majestic Silver, you can compare the effects of market volatilities on Baxter International and First Majestic 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 Baxter International with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and First Majestic.
Diversification Opportunities for Baxter International and First Majestic
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baxter and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Baxter International 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 Baxter International are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Baxter International i.e., Baxter International and First Majestic go up and down completely randomly.
Pair Corralation between Baxter International and First Majestic
Assuming the 90 days trading horizon Baxter International is expected to under-perform the First Majestic. In addition to that, Baxter International is 1.43 times more volatile than First Majestic Silver. It trades about -0.03 of its total potential returns per unit of risk. First Majestic Silver is currently generating about 0.02 per unit of volatility. If you would invest 42,549 in First Majestic Silver on October 11, 2024 and sell it today you would earn a total of 3,631 from holding First Majestic Silver or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baxter International vs. First Majestic Silver
Performance |
| Timeline |
| Baxter International |
| First Majestic Silver |
Baxter International and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and First Majestic
The main advantage of trading using opposite Baxter International and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Baxter International vs. Grupo Carso SAB | Baxter International vs. First Majestic Silver | Baxter International vs. Verizon Communications | Baxter International vs. Hoteles City Express |
| First Majestic vs. Deutsche Bank Aktiengesellschaft | First Majestic vs. DXC Technology | First Majestic vs. McEwen Mining | First Majestic vs. UnitedHealth Group Incorporated |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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