Correlation Between High-yield Municipal and First Eagle
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal 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 High-yield Municipal and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and First Eagle Gold, you can compare the effects of market volatilities on High-yield Municipal 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 High-yield Municipal with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and First Eagle.
Diversification Opportunities for High-yield Municipal and First Eagle
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between High-yield and First is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and First Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Gold and High-yield Municipal 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 High Yield Municipal Fund 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 Gold has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and First Eagle go up and down completely randomly.
Pair Corralation between High-yield Municipal and First Eagle
Assuming the 90 days horizon High-yield Municipal is expected to generate 2.01 times less return on investment than First Eagle. But when comparing it to its historical volatility, High Yield Municipal Fund is 6.16 times less risky than First Eagle. It trades about 0.15 of its potential returns per unit of risk. First Eagle Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,656 in First Eagle Gold on September 1, 2024 and sell it today you would earn a total of 222.00 from holding First Eagle Gold or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. First Eagle Gold
Performance |
| Timeline |
| High Yield Municipal |
| First Eagle Gold |
High-yield Municipal and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and First Eagle
The main advantage of trading using opposite High-yield Municipal and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal 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.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| First Eagle vs. Gabelli Gold Fund | First Eagle vs. International Investors Gold | First Eagle vs. Gold And Precious | First Eagle vs. Wells Fargo Advantage |
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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