Correlation Between First Majestic and Tesla
Can any of the company-specific risk be diversified away by investing in both First Majestic and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on First Majestic and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Tesla.
Diversification Opportunities for First Majestic and Tesla
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Tesla is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of First Majestic i.e., First Majestic and Tesla go up and down completely randomly.
Pair Corralation between First Majestic and Tesla
Assuming the 90 days horizon First Majestic is expected to generate 8.92 times less return on investment than Tesla. But when comparing it to its historical volatility, First Majestic Silver is 3.57 times less risky than Tesla. It trades about 0.04 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 356,156 in Tesla Inc on August 25, 2024 and sell it today you would earn a total of 365,847 from holding Tesla Inc or generate 102.72% 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. Tesla Inc
Performance |
| Timeline |
| First Majestic Silver |
| Tesla Inc |
First Majestic and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Tesla
The main advantage of trading using opposite First Majestic and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| First Majestic vs. Grupo Sports World | First Majestic vs. GMxico Transportes SAB | First Majestic vs. CVS Health | First Majestic vs. Deutsche Bank Aktiengesellschaft |
| Tesla vs. DXC Technology | Tesla vs. First Majestic Silver | Tesla vs. McEwen Mining | Tesla vs. Genworth Financial |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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