Correlation Between Pan American and First Trust

Can any of the company-specific risk be diversified away by investing in both Pan American and First Trust 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 Pan American and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pan American Silver and First Trust, you can compare the effects of market volatilities on Pan American and First Trust 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 Pan American with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan American and First Trust.

Diversification Opportunities for Pan American and First Trust

0.0

Correlation Coefficient

Pan American  First Trust

Pay attention - limited upside

The 3 months correlation between Pan and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pan American Silver and First Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust and Pan American 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 Pan American Silver are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust has no effect on the direction of Pan American i.e., Pan American and First Trust go up and down completely randomly.

Pair Corralation between Pan American and First Trust

If you would invest  1,677  in Pan American Silver on September 29, 2024 and sell it today you would earn a total of  381.00  from holding Pan American Silver or generate 22.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Pan American Silver  vs.  First Trust

Pan American Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan American Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pan American is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

First Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, First Trust 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 Pan American and First Trust

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

The idea behind Pan American Silver and First 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 Transaction History module to view history of all your transactions and understand their impact on performance.