Correlation Between Global Gold and First Eagle
Can any of the company-specific risk be diversified away by investing in both Global Gold 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 Global Gold and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and First Eagle Gold, you can compare the effects of market volatilities on Global Gold 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 Global Gold with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and First Eagle.
Diversification Opportunities for Global Gold and First Eagle
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Global and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold 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 Global Gold 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 Global Gold 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 Global Gold i.e., Global Gold and First Eagle go up and down completely randomly.
Pair Corralation between Global Gold and First Eagle
Assuming the 90 days horizon Global Gold Fund is expected to under-perform the First Eagle. In addition to that, Global Gold is 1.08 times more volatile than First Eagle Gold. It trades about -0.24 of its total potential returns per unit of risk. First Eagle Gold is currently generating about -0.21 per unit of volatility. If you would invest 3,142 in First Eagle Gold on August 25, 2024 and sell it today you would lose (265.00) from holding First Eagle Gold or give up 8.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. First Eagle Gold
Performance |
| Timeline |
| Global Gold Fund |
| First Eagle Gold |
Global Gold and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and First Eagle
The main advantage of trading using opposite Global Gold and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold 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.| Global Gold vs. First Eagle Gold | Global Gold vs. First Eagle Gold | Global Gold vs. First Eagle Gold | Global Gold vs. Gold Portfolio Fidelity |
| First Eagle vs. First Eagle Gold | First Eagle vs. First Eagle Gold | First Eagle vs. Gold Portfolio Fidelity |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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