Correlation Between Short Precious and First Eagle
Can any of the company-specific risk be diversified away by investing in both Short Precious 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 Short Precious and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Precious Metals and First Eagle Global, you can compare the effects of market volatilities on Short Precious 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 Short Precious with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Precious and First Eagle.
Diversification Opportunities for Short Precious and First Eagle
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Short and First is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Short Precious Metals and First Eagle Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Global and Short Precious 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 Short Precious Metals 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 Global has no effect on the direction of Short Precious i.e., Short Precious and First Eagle go up and down completely randomly.
Pair Corralation between Short Precious and First Eagle
Assuming the 90 days horizon Short Precious Metals is expected to under-perform the First Eagle. In addition to that, Short Precious is 5.35 times more volatile than First Eagle Global. It trades about -0.02 of its total potential returns per unit of risk. First Eagle Global is currently generating about 0.03 per unit of volatility. If you would invest 1,368 in First Eagle Global on September 6, 2024 and sell it today you would earn a total of 10.00 from holding First Eagle Global or generate 0.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Short Precious Metals vs. First Eagle Global
Performance |
Timeline |
Short Precious Metals |
First Eagle Global |
Short Precious and First Eagle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Short Precious and First Eagle
The main advantage of trading using opposite Short Precious and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Precious 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.Short Precious vs. Us Government Securities | Short Precious vs. John Hancock Government | Short Precious vs. Us Government Securities | Short Precious vs. Short Term Government Fund |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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