Correlation Between First Eagle and Precious Metals
Can any of the company-specific risk be diversified away by investing in both First Eagle and Precious Metals 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 Precious Metals 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 Precious Metals Fund, you can compare the effects of market volatilities on First Eagle and Precious Metals 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 Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Precious Metals.
Diversification Opportunities for First Eagle and Precious Metals
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Precious is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Precious Metals Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals 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 Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals has no effect on the direction of First Eagle i.e., First Eagle and Precious Metals go up and down completely randomly.
Pair Corralation between First Eagle and Precious Metals
Assuming the 90 days horizon First Eagle is expected to generate 1.11 times less return on investment than Precious Metals. But when comparing it to its historical volatility, First Eagle Gold is 1.27 times less risky than Precious Metals. It trades about 0.08 of its potential returns per unit of risk. Precious Metals Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,149 in Precious Metals Fund on November 9, 2024 and sell it today you would earn a total of 1,298 from holding Precious Metals Fund or generate 41.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Eagle Gold vs. Precious Metals Fund
Performance |
| Timeline |
| First Eagle Gold |
| Precious Metals |
First Eagle and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Eagle and Precious Metals
The main advantage of trading using opposite First Eagle and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' 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 |
| Precious Metals vs. Energy Fund Investor | Precious Metals vs. Energy Services Fund | Precious Metals vs. Basic Materials Fund | Precious Metals vs. Health Care Fund |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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