Correlation Between Small Cap and First Eagle
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and First Eagle Global, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and First Eagle.
Diversification Opportunities for Small Cap and First Eagle
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value 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 Small Cap 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 Small Cap Value 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 Small Cap i.e., Small Cap and First Eagle go up and down completely randomly.
Pair Corralation between Small Cap and First Eagle
Assuming the 90 days horizon Small Cap is expected to generate 1.26 times less return on investment than First Eagle. In addition to that, Small Cap is 2.13 times more volatile than First Eagle Global. It trades about 0.04 of its total potential returns per unit of risk. First Eagle Global is currently generating about 0.09 per unit of volatility. If you would invest 6,130 in First Eagle Global on November 9, 2024 and sell it today you would earn a total of 972.00 from holding First Eagle Global or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value vs. First Eagle Global
Performance |
| Timeline |
| Small Cap Value |
| First Eagle Global |
Small Cap and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and First Eagle
The main advantage of trading using opposite Small Cap and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Columbia Global Technology | Small Cap vs. Invesco Technology Fund | Small Cap vs. Fidelity Advisor Technology | Small Cap vs. Red Oak Technology |
| First Eagle vs. Blackrock Gbl Alloc | First Eagle vs. Ivy Asset Strategy | First Eagle vs. Fpa Crescent Fund | First Eagle vs. Templeton Global Bond |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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