Correlation Between Visa and First Majestic
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and First Majestic Silver, you can compare the effects of market volatilities on Visa 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 Visa with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and First Majestic.
Diversification Opportunities for Visa and First Majestic
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and First is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and First Majestic go up and down completely randomly.
Pair Corralation between Visa and First Majestic
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.29 times more return on investment than First Majestic. However, Visa Class A is 3.51 times less risky than First Majestic. It trades about 0.08 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.0 per unit of risk. If you would invest 21,128 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 10,342 from holding Visa Class A or generate 48.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Visa Class A vs. First Majestic Silver
Performance |
| Timeline |
| Visa Class A |
| First Majestic Silver |
Visa and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and First Majestic
The main advantage of trading using opposite Visa and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| First Majestic vs. Martin Marietta Materials | First Majestic vs. Elmos Semiconductor SE | First Majestic vs. Alior Bank SA | First Majestic vs. TechnipFMC PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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