Correlation Between First Majestic and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both First Majestic and Prudential Financial 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 Prudential Financial 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 Prudential Financial, you can compare the effects of market volatilities on First Majestic and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Prudential Financial.
Diversification Opportunities for First Majestic and Prudential Financial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Prudential is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of First Majestic i.e., First Majestic and Prudential Financial go up and down completely randomly.
Pair Corralation between First Majestic and Prudential Financial
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Prudential Financial. In addition to that, First Majestic is 2.41 times more volatile than Prudential Financial. It trades about -0.06 of its total potential returns per unit of risk. Prudential Financial is currently generating about 0.22 per unit of volatility. If you would invest 198,872 in Prudential Financial on August 28, 2024 and sell it today you would earn a total of 2,628 from holding Prudential Financial or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
First Majestic Silver vs. Prudential Financial
Performance |
| Timeline |
| First Majestic Silver |
| Prudential Financial |
First Majestic and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Prudential Financial
The main advantage of trading using opposite First Majestic and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| First Majestic vs. Visa Inc | First Majestic vs. Desarrolladora Homex SAB | First Majestic vs. The Select Sector | First Majestic vs. Promotora y Operadora |
| Prudential Financial vs. The Select Sector | Prudential Financial vs. Promotora y Operadora | Prudential Financial vs. iShares Global Timber | Prudential Financial vs. SPDR Series Trust |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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