Correlation Between First Majestic and Visa
Can any of the company-specific risk be diversified away by investing in both First Majestic and Visa 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 Visa 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 Visa Inc, you can compare the effects of market volatilities on First Majestic and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Visa.
Diversification Opportunities for First Majestic and Visa
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Visa is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of First Majestic i.e., First Majestic and Visa go up and down completely randomly.
Pair Corralation between First Majestic and Visa
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Visa. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 2.45 times less risky than Visa. The stock trades about -0.24 of its potential returns per unit of risk. The Visa Inc is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 558,908 in Visa Inc on August 25, 2024 and sell it today you would earn a total of 77,592 from holding Visa Inc or generate 13.88% 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. Visa Inc
Performance |
| Timeline |
| First Majestic Silver |
| Visa Inc |
First Majestic and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Visa
The main advantage of trading using opposite First Majestic and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa'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 |
| Visa vs. Southwest Airlines | Visa vs. The Bank of | Visa vs. Grupo Carso SAB | Visa vs. Monster Beverage Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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