Correlation Between Regional Management and First Eagle

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

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

Diversification Opportunities for Regional Management and First Eagle

-0.46

Correlation Coefficient

Regional Management  First Eagle

Very good diversification

The 3 months correlation between Regional and First is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and First Eagle Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Alternative and Regional Management 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 Regional Management Corp 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 Alternative has no effect on the direction of Regional Management i.e., Regional Management and First Eagle go up and down completely randomly.

Pair Corralation between Regional Management and First Eagle

Allowing for the 90-day total investment horizon Regional Management Corp is expected to under-perform the First Eagle. In addition to that, Regional Management is 7.77 times more volatile than First Eagle Alternative. It trades about -0.02 of its total potential returns per unit of risk. First Eagle Alternative is currently generating about 0.08 per unit of volatility. If you would invest  2,413  in First Eagle Alternative on August 31, 2024 and sell it today you would earn a total of  40.00  from holding First Eagle Alternative or generate 1.66% return on investment over 90 days.

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

Regional Management Corp  vs.  First Eagle Alternative

Regional Management Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

First Eagle Alternative

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Alternative are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, First Eagle is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Regional Management and First Eagle

The main advantage of trading using opposite Regional Management and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management 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 Regional Management Corp and First Eagle Alternative 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.