Correlation Between The Emerging and First Eagle
Can any of the company-specific risk be diversified away by investing in both The Emerging 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 Emerging 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 Emerging Markets and First Eagle Value, you can compare the effects of market volatilities on The Emerging 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 Emerging with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Emerging and First Eagle.
Diversification Opportunities for The Emerging and First Eagle
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between The and First is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and First Eagle Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Value and The Emerging 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 Emerging Markets 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 Value has no effect on the direction of The Emerging i.e., The Emerging and First Eagle go up and down completely randomly.
Pair Corralation between The Emerging and First Eagle
Assuming the 90 days horizon The Emerging is expected to generate 1.85 times less return on investment than First Eagle. In addition to that, The Emerging is 1.29 times more volatile than First Eagle Value. It trades about 0.03 of its total potential returns per unit of risk. First Eagle Value is currently generating about 0.08 per unit of volatility. If you would invest 1,682 in First Eagle Value on September 4, 2024 and sell it today you would earn a total of 470.00 from holding First Eagle Value or generate 27.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Emerging Markets vs. First Eagle Value
Performance |
| Timeline |
| Emerging Markets |
| First Eagle Value |
The Emerging and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Emerging and First Eagle
The main advantage of trading using opposite The Emerging and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Emerging 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 Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard 500 Index | The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard Total Stock |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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