Correlation Between First Eagle and Ivy Small

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

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

Diversification Opportunities for First Eagle and Ivy Small

-0.27

Correlation Coefficient

First Eagle  Ivy Small

Very good diversification

The 3 months correlation between FIRST and Ivy is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Ivy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Small Cap and First Eagle 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 Eagle Gold are associated (or correlated) with Ivy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Small Cap has no effect on the direction of First Eagle i.e., First Eagle and Ivy Small go up and down completely randomly.

Pair Corralation between First Eagle and Ivy Small

Assuming the 90 days horizon First Eagle is expected to generate 3.03 times less return on investment than Ivy Small. In addition to that, First Eagle is 1.34 times more volatile than Ivy Small Cap. It trades about 0.03 of its total potential returns per unit of risk. Ivy Small Cap is currently generating about 0.13 per unit of volatility. If you would invest  1,277  in Ivy Small Cap on September 5, 2024 and sell it today you would earn a total of  134.00  from holding Ivy Small Cap or generate 10.49% return on investment over 90 days.

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

First Eagle Gold  vs.  Ivy Small Cap

First Eagle Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Gold are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Ivy Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ivy Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Eagle and Ivy Small

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

The idea behind First Eagle Gold and Ivy Small Cap 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.