Correlation Between First Majestic and State Bank

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

Diversification Opportunities for First Majestic and State Bank

0.52

Correlation Coefficient

First Majestic  State Bank

Very weak diversification

The 3 months correlation between First and State is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of First Majestic i.e., First Majestic and State Bank go up and down completely randomly.

Pair Corralation between First Majestic and State Bank

Assuming the 90 days trading horizon First Majestic Silver is expected to generate 3.11 times more return on investment than State Bank. However, First Majestic is 3.11 times more volatile than State Bank of. It trades about 0.17 of its potential returns per unit of risk. State Bank of is currently generating about 0.07 per unit of risk. If you would invest  860.00  in First Majestic Silver on April 25, 2025 and sell it today you would earn a total of  350.00  from holding First Majestic Silver or generate 40.7% return on investment over 90 days.

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

First Majestic Silver  vs.  State Bank of

First Majestic Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, First Majestic unveiled solid returns over the last few months and may actually be approaching a breakup point.

State Bank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Majestic and State Bank

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

The idea behind First Majestic Silver and State Bank of 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.