Correlation Between Oppenheimer International and First Eagle
Can any of the company-specific risk be diversified away by investing in both Oppenheimer International 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 Oppenheimer International and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppenheimer International Bond and First Eagle Value, you can compare the effects of market volatilities on Oppenheimer International 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 Oppenheimer International with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer International and First Eagle.
Diversification Opportunities for Oppenheimer International and First Eagle
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oppenheimer and First is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer International Bond 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 Oppenheimer International 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 Oppenheimer International Bond 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 Oppenheimer International i.e., Oppenheimer International and First Eagle go up and down completely randomly.
Pair Corralation between Oppenheimer International and First Eagle
Assuming the 90 days horizon Oppenheimer International is expected to generate 4.4 times less return on investment than First Eagle. But when comparing it to its historical volatility, Oppenheimer International Bond is 1.2 times less risky than First Eagle. It trades about 0.04 of its potential returns per unit of risk. First Eagle Value is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,961 in First Eagle Value on September 1, 2024 and sell it today you would earn a total of 345.00 from holding First Eagle Value or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Oppenheimer International Bond vs. First Eagle Value
Performance |
| Timeline |
| Oppenheimer International |
| First Eagle Value |
Oppenheimer International and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oppenheimer International and First Eagle
The main advantage of trading using opposite Oppenheimer International and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppenheimer International 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 idea behind Oppenheimer International Bond and First Eagle Value pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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