Correlation Between First Majestic and Build Funds

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Can any of the company-specific risk be diversified away by investing in both First Majestic and Build Funds 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 Build Funds 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 Build Funds Trust, you can compare the effects of market volatilities on First Majestic and Build Funds 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 Build Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Build Funds.

Diversification Opportunities for First Majestic and Build Funds

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between First and Build is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Build Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build Funds Trust 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 Build Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build Funds Trust has no effect on the direction of First Majestic i.e., First Majestic and Build Funds go up and down completely randomly.

Pair Corralation between First Majestic and Build Funds

Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 13.99 times more return on investment than Build Funds. However, First Majestic is 13.99 times more volatile than Build Funds Trust. It trades about 0.05 of its potential returns per unit of risk. Build Funds Trust is currently generating about 0.1 per unit of risk. If you would invest  593.00  in First Majestic Silver on February 18, 2024 and sell it today you would earn a total of  201.00  from holding First Majestic Silver or generate 33.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

First Majestic Silver  vs.  Build Funds Trust

 Performance 
       Timeline  
First Majestic Silver 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, First Majestic reported solid returns over the last few months and may actually be approaching a breakup point.
Build Funds Trust 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Build Funds Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Build Funds is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

First Majestic and Build Funds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Majestic and Build Funds

The main advantage of trading using opposite First Majestic and Build Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Build Funds 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 Build Funds will offset losses from the drop in Build Funds' long position.
The idea behind First Majestic Silver and Build Funds Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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