Correlation Between First Majestic and Celanese
Can any of the company-specific risk be diversified away by investing in both First Majestic and Celanese 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 Celanese 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 Celanese, you can compare the effects of market volatilities on First Majestic and Celanese 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 Celanese. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Celanese.
Diversification Opportunities for First Majestic and Celanese
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Celanese is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Celanese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celanese 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 Celanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celanese has no effect on the direction of First Majestic i.e., First Majestic and Celanese go up and down completely randomly.
Pair Corralation between First Majestic and Celanese
Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 3.07 times more return on investment than Celanese. However, First Majestic is 3.07 times more volatile than Celanese. It trades about 0.27 of its potential returns per unit of risk. Celanese is currently generating about -0.19 per unit of risk. If you would invest 525.00 in First Majestic Silver on January 26, 2024 and sell it today you would earn a total of 155.00 from holding First Majestic Silver or generate 29.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Celanese
Performance |
| Timeline |
| First Majestic Silver |
| Celanese |
First Majestic and Celanese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Celanese
The main advantage of trading using opposite First Majestic and Celanese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Celanese 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 Celanese will offset losses from the drop in Celanese's long position.| First Majestic vs. Aya Gold Silver | First Majestic vs. Discovery Metals Corp | First Majestic vs. Santacruz Silv | First Majestic vs. Bald Eagle Gold |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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