Correlation Between First Majestic and APA
Can any of the company-specific risk be diversified away by investing in both First Majestic and APA 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 APA 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 APA Corporation, you can compare the effects of market volatilities on First Majestic and APA 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 APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and APA.
Diversification Opportunities for First Majestic and APA
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and APA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of First Majestic i.e., First Majestic and APA go up and down completely randomly.
Pair Corralation between First Majestic and APA
Assuming the 90 days horizon First Majestic Silver is expected to generate 0.5 times more return on investment than APA. However, First Majestic Silver is 2.02 times less risky than APA. It trades about 0.01 of its potential returns per unit of risk. APA Corporation is currently generating about -0.04 per unit of risk. If you would invest 47,422 in First Majestic Silver on September 14, 2024 and sell it today you would earn a total of 662.00 from holding First Majestic Silver or generate 1.4% 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. APA Corp.
Performance |
| Timeline |
| First Majestic Silver |
| APA Corporation |
First Majestic and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and APA
The main advantage of trading using opposite First Majestic and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| First Majestic vs. Visa Inc | First Majestic vs. Desarrolladora Homex SAB | First Majestic vs. Tesla Inc | First Majestic vs. G Collado SAB |
| APA vs. UnitedHealth Group Incorporated | APA vs. Micron Technology | APA vs. Verizon Communications | APA vs. First Majestic Silver |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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