Correlation Between First Eagle and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both First Eagle and Emerging Markets 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 Emerging Markets 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 Emerging Markets Fund, you can compare the effects of market volatilities on First Eagle and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Emerging Markets.
Diversification Opportunities for First Eagle and Emerging Markets
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Emerging is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of First Eagle i.e., First Eagle and Emerging Markets go up and down completely randomly.
Pair Corralation between First Eagle and Emerging Markets
Assuming the 90 days horizon First Eagle Gold is expected to generate 3.82 times more return on investment than Emerging Markets. However, First Eagle is 3.82 times more volatile than Emerging Markets Fund. It trades about 0.06 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.13 per unit of risk. If you would invest 2,488 in First Eagle Gold on September 13, 2024 and sell it today you would earn a total of 53.00 from holding First Eagle Gold or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Eagle Gold vs. Emerging Markets Fund
Performance |
| Timeline |
| First Eagle Gold |
| Emerging Markets |
First Eagle and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Eagle and Emerging Markets
The main advantage of trading using opposite First Eagle and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' 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 |
| Emerging Markets vs. Atac Inflation Rotation | Emerging Markets vs. Schwab Treasury Inflation | Emerging Markets vs. Aqr Managed Futures | Emerging Markets vs. Loomis Sayles Inflation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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