Correlation Between First Majestic and Insteel Industries

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

Diversification Opportunities for First Majestic and Insteel Industries

-0.18

Correlation Coefficient

First Majestic  Insteel Industries

Good diversification

The 3 months correlation between First and Insteel is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of First Majestic i.e., First Majestic and Insteel Industries go up and down completely randomly.

Pair Corralation between First Majestic and Insteel Industries

Allowing for the 90-day total investment horizon First Majestic Silver is expected to under-perform the Insteel Industries. In addition to that, First Majestic is 1.16 times more volatile than Insteel Industries. It trades about -0.05 of its total potential returns per unit of risk. Insteel Industries is currently generating about 0.13 per unit of volatility. If you would invest  2,751  in Insteel Industries on January 19, 2025 and sell it today you would earn a total of  290.00  from holding Insteel Industries or generate 10.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Majestic Silver  vs.  Insteel Industries

First Majestic Silver

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, First Majestic reported solid returns over the last few months and may actually be approaching a breakup point.

Insteel Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Insteel Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Insteel Industries may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with First Majestic and Insteel Industries

The main advantage of trading using opposite First Majestic and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.

The idea behind First Majestic Silver and Insteel Industries 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.