Correlation Between First Eagle and Invesco Gold
Can any of the company-specific risk be diversified away by investing in both First Eagle and Invesco Gold 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 First Eagle and Invesco Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Eagle Gold and Invesco Gold Special, you can compare the effects of market volatilities on First Eagle and Invesco Gold 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 First Eagle with a short position of Invesco Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Invesco Gold.
Diversification Opportunities for First Eagle and Invesco Gold
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Invesco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Invesco Gold Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Gold Special and First Eagle 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 First Eagle Gold are associated (or correlated) with Invesco Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Gold Special has no effect on the direction of First Eagle i.e., First Eagle and Invesco Gold go up and down completely randomly.
Pair Corralation between First Eagle and Invesco Gold
Assuming the 90 days horizon First Eagle Gold is expected to under-perform the Invesco Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, First Eagle Gold is 1.08 times less risky than Invesco Gold. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Invesco Gold Special is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 3,020 in Invesco Gold Special on September 1, 2024 and sell it today you would lose (166.00) from holding Invesco Gold Special or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Eagle Gold vs. Invesco Gold Special
Performance |
| Timeline |
| First Eagle Gold |
| Invesco Gold Special |
First Eagle and Invesco Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Eagle and Invesco Gold
The main advantage of trading using opposite First Eagle and Invesco Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Invesco Gold 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 Invesco Gold will offset losses from the drop in Invesco Gold's long position.| First Eagle vs. First Eagle Gold | First Eagle vs. First Eagle Gold | First Eagle vs. Franklin Gold Precious | First Eagle vs. First Eagle Global |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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