Correlation Between VMware and First Majestic
Can any of the company-specific risk be diversified away by investing in both VMware 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 VMware and First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and First Majestic Silver, you can compare the effects of market volatilities on VMware 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 VMware with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and First Majestic.
Diversification Opportunities for VMware and First Majestic
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VMware and First is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc 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 VMware 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 VMware Inc 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 VMware i.e., VMware and First Majestic go up and down completely randomly.
Pair Corralation between VMware and First Majestic
Considering the 90-day investment horizon VMware Inc is expected to generate 0.43 times more return on investment than First Majestic. However, VMware Inc is 2.32 times less risky than First Majestic. It trades about 0.05 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.02 per unit of risk. If you would invest 11,403 in VMware Inc on January 25, 2024 and sell it today you would earn a total of 2,845 from holding VMware Inc or generate 24.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.14% |
| Values | Daily Returns |
VMware Inc vs. First Majestic Silver
Performance |
| Timeline |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Majestic Silver |
VMware and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VMware and First Majestic
The main advantage of trading using opposite VMware and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware 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.The idea behind VMware Inc and First Majestic Silver 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.| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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