Correlation Between T Rowe and First Eagle
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and First Eagle Small, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and First Eagle.
Diversification Opportunities for T Rowe and First Eagle
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PATFX and First is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and First Eagle go up and down completely randomly.
Pair Corralation between T Rowe and First Eagle
Assuming the 90 days horizon T Rowe Price is expected to generate about the same return on investment as First Eagle Small. But, T Rowe Price is 6.39 times less risky than First Eagle. It trades about 0.32 of its potential returns per unit of risk. First Eagle Small is currently generating about 0.05 per unit of risk. If you would invest 1,099 in First Eagle Small on September 13, 2024 and sell it today you would earn a total of 9.00 from holding First Eagle Small or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. First Eagle Small
Performance |
| Timeline |
| T Rowe Price |
| First Eagle Small |
T Rowe and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and First Eagle
The main advantage of trading using opposite T Rowe and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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 T Rowe Price and First Eagle Small 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.| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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