Correlation Between First Majestic and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both First Majestic and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on First Majestic and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Kaiser Aluminum.
Diversification Opportunities for First Majestic and Kaiser Aluminum
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Kaiser is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of First Majestic i.e., First Majestic and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between First Majestic and Kaiser Aluminum
Allowing for the 90-day total investment horizon First Majestic Silver is expected to under-perform the Kaiser Aluminum. In addition to that, First Majestic is 1.3 times more volatile than Kaiser Aluminum. It trades about 0.0 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.01 per unit of volatility. If you would invest 8,948 in Kaiser Aluminum on January 19, 2024 and sell it today you would earn a total of 48.00 from holding Kaiser Aluminum or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Kaiser Aluminum
Performance |
| Timeline |
| First Majestic Silver |
| Kaiser Aluminum |
First Majestic and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Kaiser Aluminum
The main advantage of trading using opposite First Majestic and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| First Majestic vs. Endeavour Silver Corp | First Majestic vs. Fortuna Silver Mines | First Majestic vs. Pan American Silver | First Majestic vs. Hecla Mining |
| Kaiser Aluminum vs. Immutep Ltd ADR | Kaiser Aluminum vs. Home Federal Bancorp | Kaiser Aluminum vs. Anheuser Busch Inbev | Kaiser Aluminum vs. Marker Therapeutics |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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