Correlation Between Brookfield Investments and First Majestic
Can any of the company-specific risk be diversified away by investing in both Brookfield Investments 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 Brookfield Investments and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Investments and First Majestic Silver, you can compare the effects of market volatilities on Brookfield Investments 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 Brookfield Investments with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Investments and First Majestic.
Diversification Opportunities for Brookfield Investments and First Majestic
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Brookfield and First is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Investments 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 Brookfield Investments 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 Brookfield Investments 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 Brookfield Investments i.e., Brookfield Investments and First Majestic go up and down completely randomly.
Pair Corralation between Brookfield Investments and First Majestic
Assuming the 90 days trading horizon Brookfield Investments is expected to generate 8.55 times less return on investment than First Majestic. But when comparing it to its historical volatility, Brookfield Investments is 8.89 times less risky than First Majestic. It trades about 0.01 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 913.00 in First Majestic Silver on August 29, 2024 and sell it today you would lose (48.00) from holding First Majestic Silver or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 51.02% |
| Values | Daily Returns |
Brookfield Investments vs. First Majestic Silver
Performance |
| Timeline |
| Brookfield Investments |
| First Majestic Silver |
Brookfield Investments and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Investments and First Majestic
The main advantage of trading using opposite Brookfield Investments and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Investments 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.| Brookfield Investments vs. NVIDIA CDR | Brookfield Investments vs. Apple Inc CDR | Brookfield Investments vs. Microsoft Corp CDR | Brookfield Investments vs. Alphabet Inc CDR |
| First Majestic vs. 2028 Investment Grade | First Majestic vs. Western Investment | First Majestic vs. Atrium Mortgage Investment | First Majestic vs. Air Canada |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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