Correlation Between First Majestic and Ross Stores
Can any of the company-specific risk be diversified away by investing in both First Majestic and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on First Majestic and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Ross Stores.
Diversification Opportunities for First Majestic and Ross Stores
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Ross is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of First Majestic i.e., First Majestic and Ross Stores go up and down completely randomly.
Pair Corralation between First Majestic and Ross Stores
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Ross Stores. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 3.42 times less risky than Ross Stores. The stock trades about -0.28 of its potential returns per unit of risk. The Ross Stores is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 286,000 in Ross Stores on August 31, 2024 and sell it today you would earn a total of 26,485 from holding Ross Stores or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 38.1% |
| Values | Daily Returns |
First Majestic Silver vs. Ross Stores
Performance |
| Timeline |
| First Majestic Silver |
| Ross Stores |
First Majestic and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Ross Stores
The main advantage of trading using opposite First Majestic and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| First Majestic vs. Visa Inc | First Majestic vs. Desarrolladora Homex SAB | First Majestic vs. Tesla Inc | First Majestic vs. CMR SAB de |
| Ross Stores vs. KB Home | Ross Stores vs. Grupo Sports World | Ross Stores vs. The Bank of | Ross Stores vs. Hoteles City Express |
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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