Correlation Between Sarofim Equity and First Eagle
Can any of the company-specific risk be diversified away by investing in both Sarofim Equity 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 Sarofim Equity and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarofim Equity and First Eagle Global, you can compare the effects of market volatilities on Sarofim Equity 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 Sarofim Equity with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarofim Equity and First Eagle.
Diversification Opportunities for Sarofim Equity and First Eagle
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sarofim and First is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity 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 Sarofim Equity 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 Sarofim Equity 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 Sarofim Equity i.e., Sarofim Equity and First Eagle go up and down completely randomly.
Pair Corralation between Sarofim Equity and First Eagle
Assuming the 90 days horizon Sarofim Equity is expected to generate 1.89 times more return on investment than First Eagle. However, Sarofim Equity is 1.89 times more volatile than First Eagle Global. It trades about 0.09 of its potential returns per unit of risk. First Eagle Global is currently generating about -0.06 per unit of risk. If you would invest 1,671 in Sarofim Equity on September 14, 2024 and sell it today you would earn a total of 57.00 from holding Sarofim Equity or generate 3.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sarofim Equity vs. First Eagle Global
Performance |
Timeline |
Sarofim Equity |
First Eagle Global |
Sarofim Equity and First Eagle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sarofim Equity and First Eagle
The main advantage of trading using opposite Sarofim Equity and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarofim Equity 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.Sarofim Equity vs. Bbh Intermediate Municipal | Sarofim Equity vs. Alliancebernstein National Municipal | Sarofim Equity vs. Touchstone Premium Yield | Sarofim Equity vs. Ambrus Core Bond |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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