Correlation Between Dream Office and First Majestic
Can any of the company-specific risk be diversified away by investing in both Dream Office 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 Dream Office and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Office Real and First Majestic Silver, you can compare the effects of market volatilities on Dream Office 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 Dream Office with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Office and First Majestic.
Diversification Opportunities for Dream Office and First Majestic
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dream and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dream Office Real 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 Dream Office 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 Dream Office Real 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 Dream Office i.e., Dream Office and First Majestic go up and down completely randomly.
Pair Corralation between Dream Office and First Majestic
Assuming the 90 days trading horizon Dream Office is expected to generate 8.87 times less return on investment than First Majestic. But when comparing it to its historical volatility, Dream Office Real is 1.41 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 0.05 of returns per unit of risk over similar time horizon. If you would invest 628.00 in First Majestic Silver on November 3, 2024 and sell it today you would earn a total of 200.00 from holding First Majestic Silver or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Office Real vs. First Majestic Silver
Performance |
| Timeline |
| Dream Office Real |
| First Majestic Silver |
Dream Office and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Office and First Majestic
The main advantage of trading using opposite Dream Office and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Office 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.| Dream Office vs. Artis Real Estate | Dream Office vs. Boardwalk Real Estate | Dream Office vs. Allied Properties Real | Dream Office vs. HR Real Estate |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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