Correlation Between First Majestic and Microsoft
Can any of the company-specific risk be diversified away by investing in both First Majestic and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on First Majestic and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Microsoft.
Diversification Opportunities for First Majestic and Microsoft
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Microsoft is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of First Majestic i.e., First Majestic and Microsoft go up and down completely randomly.
Pair Corralation between First Majestic and Microsoft
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Microsoft. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 3.35 times less risky than Microsoft. The stock trades about -0.24 of its potential returns per unit of risk. The Microsoft is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 839,057 in Microsoft on August 25, 2024 and sell it today you would earn a total of 10,591 from holding Microsoft or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Microsoft
Performance |
| Timeline |
| First Majestic Silver |
| Microsoft |
First Majestic and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Microsoft
The main advantage of trading using opposite First Majestic and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| First Majestic vs. Visa Inc | First Majestic vs. Desarrolladora Homex SAB | First Majestic vs. CMR SAB de | First Majestic vs. The Select Sector |
| Microsoft vs. Ameriprise Financial | Microsoft vs. Micron Technology | Microsoft vs. Cognizant Technology Solutions | Microsoft 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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