Correlation Between Davis New and First Eagle
Can any of the company-specific risk be diversified away by investing in both Davis New 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 Davis New and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis New York and First Eagle Global, you can compare the effects of market volatilities on Davis New 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 Davis New with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis New and First Eagle.
Diversification Opportunities for Davis New and First Eagle
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Davis and First is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Davis New York and First Eagle Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Global and Davis New 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 Davis New York 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 Global has no effect on the direction of Davis New i.e., Davis New and First Eagle go up and down completely randomly.
Pair Corralation between Davis New and First Eagle
Assuming the 90 days horizon Davis New York is expected to generate 2.2 times more return on investment than First Eagle. However, Davis New is 2.2 times more volatile than First Eagle Global. It trades about 0.14 of its potential returns per unit of risk. First Eagle Global is currently generating about -0.06 per unit of risk. If you would invest 2,341 in Davis New York on August 29, 2024 and sell it today you would earn a total of 79.00 from holding Davis New York or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Davis New York vs. First Eagle Global
Performance |
| Timeline |
| Davis New York |
| First Eagle Global |
Davis New and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis New and First Eagle
The main advantage of trading using opposite Davis New and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis New 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.| Davis New vs. Morgan Stanley Global | Davis New vs. Ab Global Bond | Davis New vs. Ms Global Fixed | Davis New vs. Scharf Global Opportunity |
| First Eagle vs. Ivy Asset Strategy | First Eagle vs. Blackrock Gbl Alloc | First Eagle vs. Templeton Global Bond | First Eagle vs. Loomis Sayles Strategic |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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