Correlation Between Las Vegas and First Majestic
Can any of the company-specific risk be diversified away by investing in both Las Vegas and First Majestic 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 Las Vegas and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Las Vegas Sands and First Majestic Silver, you can compare the effects of market volatilities on Las Vegas and First Majestic 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 Las Vegas with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and First Majestic.
Diversification Opportunities for Las Vegas and First Majestic
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Las and First is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Las Vegas 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 Las Vegas Sands are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Las Vegas i.e., Las Vegas and First Majestic go up and down completely randomly.
Pair Corralation between Las Vegas and First Majestic
Assuming the 90 days trading horizon Las Vegas Sands is expected to generate 2.13 times more return on investment than First Majestic. However, Las Vegas is 2.13 times more volatile than First Majestic Silver. It trades about 0.3 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.05 per unit of risk. If you would invest 75,944 in Las Vegas Sands on September 2, 2024 and sell it today you would earn a total of 30,606 from holding Las Vegas Sands or generate 40.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Las Vegas Sands vs. First Majestic Silver
Performance |
| Timeline |
| Las Vegas Sands |
| First Majestic Silver |
Las Vegas and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and First Majestic
The main advantage of trading using opposite Las Vegas and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Las Vegas vs. FibraHotel | Las Vegas vs. Martin Marietta Materials | Las Vegas vs. Grupo Hotelero Santa | Las Vegas vs. Hoteles City Express |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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