Correlation Between Great West and First Eagle
Can any of the company-specific risk be diversified away by investing in both Great West 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 Great West and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Real Estate and First Eagle Small, you can compare the effects of market volatilities on Great West 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 Great West with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and First Eagle.
Diversification Opportunities for Great West and First Eagle
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great and First is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Great West Real Estate 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 Great West 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 Great West Real Estate 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 Great West i.e., Great West and First Eagle go up and down completely randomly.
Pair Corralation between Great West and First Eagle
Assuming the 90 days horizon Great West is expected to generate 19.46 times less return on investment than First Eagle. But when comparing it to its historical volatility, Great West Real Estate is 1.32 times less risky than First Eagle. It trades about 0.01 of its potential returns per unit of risk. First Eagle Small is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,059 in First Eagle Small on September 13, 2024 and sell it today you would earn a total of 49.00 from holding First Eagle Small or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Real Estate vs. First Eagle Small
Performance |
| Timeline |
| Great West Real |
| First Eagle Small |
Great West and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and First Eagle
The main advantage of trading using opposite Great West and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West 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.| Great West vs. Blackrock Sm Cap | Great West vs. Pimco Diversified Income | Great West vs. Fidelity Advisor Diversified | Great West vs. Tiaa Cref Small Cap Blend |
| First Eagle vs. First Eagle Global | First Eagle vs. First Eagle Global | First Eagle vs. First Eagle Global | First Eagle vs. First Eagle 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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