Correlation Between Cardinal Small and First Eagle

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

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

Diversification Opportunities for Cardinal Small and First Eagle

-0.04

Correlation Coefficient

Cardinal Small  First Eagle

Good diversification

The 3 months correlation between Cardinal and First is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and First Eagle High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle High and Cardinal Small 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 Cardinal Small Cap 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 High has no effect on the direction of Cardinal Small i.e., Cardinal Small and First Eagle go up and down completely randomly.

Pair Corralation between Cardinal Small and First Eagle

Assuming the 90 days horizon Cardinal Small Cap is expected to generate 0.04 times more return on investment than First Eagle. However, Cardinal Small Cap is 24.04 times less risky than First Eagle. It trades about 0.22 of its potential returns per unit of risk. First Eagle High is currently generating about 0.0 per unit of risk. If you would invest  1,441  in Cardinal Small Cap on September 15, 2024 and sell it today you would earn a total of  3.00  from holding Cardinal Small Cap or generate 0.21% return on investment over 90 days.

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

Cardinal Small Cap  vs.  First Eagle High

Cardinal Small Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cardinal Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle High

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days First Eagle High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental 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 Cardinal Small and First Eagle

The main advantage of trading using opposite Cardinal Small and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Small 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 Cardinal Small Cap and First Eagle High 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.