Correlation Between Ab Global and First Eagle

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

By analyzing existing cross correlation between Ab Global Risk and First Eagle Funds, you can compare the effects of market volatilities on Ab Global and First Eagle 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 Ab Global with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and First Eagle.

Diversification Opportunities for Ab Global and First Eagle

0.2

Correlation Coefficient

Ab Global  First Eagle

Modest diversification

The 3 months correlation between CBSYX and First is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and First Eagle Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Funds and Ab Global 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 Ab Global Risk are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Funds has no effect on the direction of Ab Global i.e., Ab Global and First Eagle go up and down completely randomly.

Pair Corralation between Ab Global and First Eagle

Assuming the 90 days horizon Ab Global Risk is expected to under-perform the First Eagle. In addition to that, Ab Global is 3.09 times more volatile than First Eagle Funds. It trades about -0.14 of its total potential returns per unit of risk. First Eagle Funds is currently generating about -0.19 per unit of volatility. If you would invest  1,167  in First Eagle Funds on September 13, 2024 and sell it today you would lose (70.00) from holding First Eagle Funds or give up 6.0% of portfolio value over 90 days.

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

Ab Global Risk  vs.  First Eagle Funds

Ab Global Risk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global Risk are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Eagle Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Global and First Eagle

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

The idea behind Ab Global Risk and First Eagle Funds 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.