Correlation Between The Fairholme and First Eagle
Can any of the company-specific risk be diversified away by investing in both The Fairholme 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 The Fairholme and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Fairholme Fund and First Eagle Global, you can compare the effects of market volatilities on The Fairholme 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 The Fairholme with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Fairholme and First Eagle.
Diversification Opportunities for The Fairholme and First Eagle
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between The and First is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding The Fairholme Fund 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 The Fairholme 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 The Fairholme 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 Global has no effect on the direction of The Fairholme i.e., The Fairholme and First Eagle go up and down completely randomly.
Pair Corralation between The Fairholme and First Eagle
Assuming the 90 days horizon The Fairholme Fund is expected to generate 2.34 times more return on investment than First Eagle. However, The Fairholme is 2.34 times more volatile than First Eagle Global. It trades about 0.05 of its potential returns per unit of risk. First Eagle Global is currently generating about 0.09 per unit of risk. If you would invest 2,327 in The Fairholme Fund on August 26, 2024 and sell it today you would earn a total of 946.00 from holding The Fairholme Fund or generate 40.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Fairholme Fund vs. First Eagle Global
Performance |
| Timeline |
| The Fairholme |
| First Eagle Global |
The Fairholme and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Fairholme and First Eagle
The main advantage of trading using opposite The Fairholme and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Fairholme 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.| The Fairholme vs. The Fairholme Focused | The Fairholme vs. Vanguard Wellington Fund | The Fairholme vs. Vanguard Materials Index | The Fairholme vs. Vanguard Target Retirement |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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