Correlation Between Fundamental Large and First Eagle
Can any of the company-specific risk be diversified away by investing in both Fundamental Large 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 Fundamental Large and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Large Cap and First Eagle Small, you can compare the effects of market volatilities on Fundamental Large 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 Fundamental Large with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and First Eagle.
Diversification Opportunities for Fundamental Large and First Eagle
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fundamental and First is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap and First Eagle Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Small and Fundamental Large 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 Fundamental Large Cap 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 Small has no effect on the direction of Fundamental Large i.e., Fundamental Large and First Eagle go up and down completely randomly.
Pair Corralation between Fundamental Large and First Eagle
Assuming the 90 days horizon Fundamental Large Cap is expected to under-perform the First Eagle. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fundamental Large Cap is 1.01 times less risky than First Eagle. The mutual fund trades about -0.04 of its potential returns per unit of risk. The First Eagle Small is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,003 in First Eagle Small on December 4, 2024 and sell it today you would lose (34.00) from holding First Eagle Small or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fundamental Large Cap vs. First Eagle Small
Performance |
| Timeline |
| Fundamental Large Cap |
| First Eagle Small |
Fundamental Large and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundamental Large and First Eagle
The main advantage of trading using opposite Fundamental Large and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Large 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.| Fundamental Large vs. Transamerica Asset Allocation | Fundamental Large vs. The Hartford Growth | Fundamental Large vs. The Hartford International | Fundamental Large vs. Morgan Stanley Institutional |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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