Correlation Between First Majestic and Ecolab
Can any of the company-specific risk be diversified away by investing in both First Majestic and Ecolab 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 Ecolab 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 Ecolab Inc, you can compare the effects of market volatilities on First Majestic and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Ecolab.
Diversification Opportunities for First Majestic and Ecolab
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Ecolab is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of First Majestic i.e., First Majestic and Ecolab go up and down completely randomly.
Pair Corralation between First Majestic and Ecolab
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Ecolab. In addition to that, First Majestic is 6.87 times more volatile than Ecolab Inc. It trades about -0.03 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.15 per unit of volatility. If you would invest 488,900 in Ecolab Inc on September 3, 2024 and sell it today you would earn a total of 5,553 from holding Ecolab Inc or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
First Majestic Silver vs. Ecolab Inc
Performance |
| Timeline |
| First Majestic Silver |
| Ecolab Inc |
First Majestic and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Ecolab
The main advantage of trading using opposite First Majestic and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| First Majestic vs. Samsung Electronics Co | First Majestic vs. Southwest Airlines | First Majestic vs. Genworth Financial | First Majestic vs. UnitedHealth Group Incorporated |
| Ecolab vs. Capital One Financial | Ecolab vs. Genworth Financial | Ecolab vs. First Majestic Silver | Ecolab vs. GMxico Transportes SAB |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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