Correlation Between Capital One and First Majestic
Can any of the company-specific risk be diversified away by investing in both Capital One 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 Capital One and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and First Majestic Silver, you can compare the effects of market volatilities on Capital One 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 Capital One with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and First Majestic.
Diversification Opportunities for Capital One and First Majestic
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Capital and First is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial 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 Capital One 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 Capital One Financial 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 Capital One i.e., Capital One and First Majestic go up and down completely randomly.
Pair Corralation between Capital One and First Majestic
Assuming the 90 days trading horizon Capital One Financial is expected to generate 4.71 times more return on investment than First Majestic. However, Capital One is 4.71 times more volatile than First Majestic Silver. It trades about 0.24 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.06 per unit of risk. If you would invest 329,677 in Capital One Financial on August 28, 2024 and sell it today you would earn a total of 53,309 from holding Capital One Financial or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Capital One Financial vs. First Majestic Silver
Performance |
| Timeline |
| Capital One Financial |
| First Majestic Silver |
Capital One and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and First Majestic
The main advantage of trading using opposite Capital One and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One 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.| Capital One vs. Micron Technology | Capital One vs. United States Steel | Capital One vs. Prudential Financial | Capital One vs. Verizon Communications |
| First Majestic vs. Visa Inc | First Majestic vs. Desarrolladora Homex SAB | First Majestic vs. CMR SAB de | First Majestic vs. The Select Sector |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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