Correlation Between Capital Income and First Eagle
Can any of the company-specific risk be diversified away by investing in both Capital Income 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 Capital Income and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and First Eagle Gold, you can compare the effects of market volatilities on Capital Income 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 Capital Income with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and First Eagle.
Diversification Opportunities for Capital Income and First Eagle
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder 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 Capital Income 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 Capital Income Builder 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 Capital Income i.e., Capital Income and First Eagle go up and down completely randomly.
Pair Corralation between Capital Income and First Eagle
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.64 times more return on investment than First Eagle. However, Capital Income Builder is 1.57 times less risky than First Eagle. It trades about -0.24 of its potential returns per unit of risk. First Eagle Gold is currently generating about -0.18 per unit of risk. If you would invest 7,317 in Capital Income Builder on October 9, 2024 and sell it today you would lose (358.00) from holding Capital Income Builder or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. First Eagle Gold
Performance |
| Timeline |
| Capital Income Builder |
| First Eagle Gold |
Capital Income and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and First Eagle
The main advantage of trading using opposite Capital Income and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income 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.| Capital Income vs. Gold And Precious | Capital Income vs. Sprott Gold Equity | Capital Income vs. Global Gold Fund | Capital Income vs. Gabelli Gold Fund |
| First Eagle vs. First Eagle Gold | First Eagle vs. First Eagle Gold | First Eagle vs. Franklin Gold Precious | First Eagle vs. First Eagle Global |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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