Correlation Between First Majestic and Halliburton

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Can any of the company-specific risk be diversified away by investing in both First Majestic and Halliburton 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 Halliburton 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 Halliburton, you can compare the effects of market volatilities on First Majestic and Halliburton 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 Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Halliburton.

Diversification Opportunities for First Majestic and Halliburton

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between First and Halliburton is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of First Majestic i.e., First Majestic and Halliburton go up and down completely randomly.

Pair Corralation between First Majestic and Halliburton

Assuming the 90 days horizon First Majestic Silver is expected to generate 0.23 times more return on investment than Halliburton. However, First Majestic Silver is 4.26 times less risky than Halliburton. It trades about -0.09 of its potential returns per unit of risk. Halliburton is currently generating about -0.11 per unit of risk. If you would invest  49,072  in First Majestic Silver on September 15, 2024 and sell it today you would lose (785.00) from holding First Majestic Silver or give up 1.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

First Majestic Silver  vs.  Halliburton

 Performance 
       Timeline  
First Majestic Silver 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, First Majestic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Halliburton 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Halliburton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Majestic and Halliburton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Majestic and Halliburton

The main advantage of trading using opposite First Majestic and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.
The idea behind First Majestic Silver and Halliburton pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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