Correlation Between First Majestic and Bank of America
Can any of the company-specific risk be diversified away by investing in both First Majestic and Bank of America 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 Bank of America 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 Bank of America, you can compare the effects of market volatilities on First Majestic and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Bank of America.
Diversification Opportunities for First Majestic and Bank of America
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Bank is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of First Majestic i.e., First Majestic and Bank of America go up and down completely randomly.
Pair Corralation between First Majestic and Bank of America
Assuming the 90 days horizon First Majestic is expected to generate 10.42 times less return on investment than Bank of America. But when comparing it to its historical volatility, First Majestic Silver is 1.68 times less risky than Bank of America. It trades about 0.02 of its potential returns per unit of risk. Bank of America is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 71,532 in Bank of America on September 12, 2024 and sell it today you would earn a total of 22,127 from holding Bank of America or generate 30.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Bank of America
Performance |
| Timeline |
| First Majestic Silver |
| Bank of America |
First Majestic and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Bank of America
The main advantage of trading using opposite First Majestic and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America'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 |
| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Citigroup | Bank of America vs. The Select Sector | Bank of America vs. Promotora y Operadora |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |