Correlation Between First Eagle and Sierra E

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

By analyzing existing cross correlation between First Eagle Value and Sierra E Retirement, you can compare the effects of market volatilities on First Eagle and Sierra E 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 Sierra E. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Sierra E.

Diversification Opportunities for First Eagle and Sierra E

-0.18

Correlation Coefficient

First Eagle  Sierra E

Good diversification

The 3 months correlation between First and Sierra is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Value and Sierra E Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra E Retirement 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 Value are associated (or correlated) with Sierra E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra E Retirement has no effect on the direction of First Eagle i.e., First Eagle and Sierra E go up and down completely randomly.

Pair Corralation between First Eagle and Sierra E

Assuming the 90 days horizon First Eagle Value is expected to under-perform the Sierra E. In addition to that, First Eagle is 6.16 times more volatile than Sierra E Retirement. It trades about -0.21 of its total potential returns per unit of risk. Sierra E Retirement is currently generating about 0.19 per unit of volatility. If you would invest  2,298  in Sierra E Retirement on September 17, 2024 and sell it today you would earn a total of  21.00  from holding Sierra E Retirement or generate 0.91% return on investment over 90 days.

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

First Eagle Value  vs.  Sierra E Retirement

First Eagle Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sierra E Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with First Eagle and Sierra E

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

The idea behind First Eagle Value and Sierra E Retirement 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.