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
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PAVLX and First is 0.97. 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 under-perform the First Eagle. But the mutual fund apears to be less risky and, when comparing its historical volatility, T Rowe Price is 1.7 times less risky than First Eagle. The mutual fund trades about -0.2 of its potential returns per unit of risk. The First Eagle Small is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,117 in First Eagle Small on September 12, 2024 and sell it today you would lose (6.00) from holding First Eagle Small or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| 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.| T Rowe vs. Miller Opportunity Trust | T Rowe vs. International Equity Portfolio | T Rowe vs. T Rowe Price | T Rowe vs. Commodityrealreturn Strategy Fund |
| First Eagle vs. T Rowe Price | First Eagle vs. Qs Large Cap | First Eagle vs. T Rowe Price | First Eagle vs. Jhancock Disciplined Value |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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