Correlation Between Prudential Government and First Eagle
Can any of the company-specific risk be diversified away by investing in both Prudential Government 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 Prudential Government and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Government Money and First Eagle Gold, you can compare the effects of market volatilities on Prudential Government 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 Prudential Government with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Government and First Eagle.
Diversification Opportunities for Prudential Government and First Eagle
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and First is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Government Money and First Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Gold and Prudential Government 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 Prudential Government Money 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 Gold has no effect on the direction of Prudential Government i.e., Prudential Government and First Eagle go up and down completely randomly.
Pair Corralation between Prudential Government and First Eagle
Assuming the 90 days horizon Prudential Government is expected to generate 27.81 times less return on investment than First Eagle. But when comparing it to its historical volatility, Prudential Government Money is 2.63 times less risky than First Eagle. It trades about 0.0 of its potential returns per unit of risk. First Eagle Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,364 in First Eagle Gold on September 3, 2024 and sell it today you would earn a total of 125.00 from holding First Eagle Gold or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 34.47% |
| Values | Daily Returns |
Prudential Government Money vs. First Eagle Gold
Performance |
| Timeline |
| Prudential Government |
| First Eagle Gold |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Prudential Government and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Government and First Eagle
The main advantage of trading using opposite Prudential Government and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Government 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.| Prudential Government vs. Tfa Alphagen Growth | Prudential Government vs. Mid Cap Growth | Prudential Government vs. Pace Large Growth | Prudential Government vs. T Rowe Price |
| First Eagle vs. Leggmason Partners Institutional | First Eagle vs. Arrow Managed Futures | First Eagle vs. Bbh Intermediate Municipal | First Eagle vs. Materials Portfolio Fidelity |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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