Correlation Between Multisector Bond and First Eagle
Can any of the company-specific risk be diversified away by investing in both Multisector Bond 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 Multisector Bond and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and First Eagle Small, you can compare the effects of market volatilities on Multisector Bond 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 Multisector Bond with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and First Eagle.
Diversification Opportunities for Multisector Bond and First Eagle
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Multisector and First is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma 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 Multisector Bond 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 Multisector Bond Sma 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 Multisector Bond i.e., Multisector Bond and First Eagle go up and down completely randomly.
Pair Corralation between Multisector Bond and First Eagle
Assuming the 90 days horizon Multisector Bond is expected to generate 1.33 times less return on investment than First Eagle. But when comparing it to its historical volatility, Multisector Bond Sma is 3.41 times less risky than First Eagle. It trades about 0.11 of its potential returns per unit of risk. First Eagle Small is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 979.00 in First Eagle Small on September 14, 2024 and sell it today you would earn a total of 121.00 from holding First Eagle Small or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. First Eagle Small
Performance |
| Timeline |
| Multisector Bond Sma |
| First Eagle Small |
Multisector Bond and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and First Eagle
The main advantage of trading using opposite Multisector Bond and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond 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.| Multisector Bond vs. Lord Abbett Diversified | Multisector Bond vs. Adams Diversified Equity | Multisector Bond vs. Western Asset Diversified |
| First Eagle vs. Rbb Fund | First Eagle vs. Abr 7525 Volatility | First Eagle vs. Falcon Focus Scv | First Eagle vs. Volumetric Fund Volumetric |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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