Correlation Between Palm Valley and First Eagle
Can any of the company-specific risk be diversified away by investing in both Palm Valley 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 Palm Valley and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palm Valley Capital and First Eagle Global, you can compare the effects of market volatilities on Palm Valley 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 Palm Valley with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palm Valley and First Eagle.
Diversification Opportunities for Palm Valley and First Eagle
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Palm and First is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Palm Valley Capital 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 Palm Valley 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 Palm Valley Capital 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 Palm Valley i.e., Palm Valley and First Eagle go up and down completely randomly.
Pair Corralation between Palm Valley and First Eagle
Assuming the 90 days horizon Palm Valley is expected to generate 1.64 times less return on investment than First Eagle. But when comparing it to its historical volatility, Palm Valley Capital is 2.1 times less risky than First Eagle. It trades about 0.1 of its potential returns per unit of risk. First Eagle Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,173 in First Eagle Global on September 3, 2024 and sell it today you would earn a total of 208.00 from holding First Eagle Global or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palm Valley Capital vs. First Eagle Global
Performance |
| Timeline |
| Palm Valley Capital |
| First Eagle Global |
Palm Valley and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palm Valley and First Eagle
The main advantage of trading using opposite Palm Valley and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palm Valley 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.| Palm Valley vs. Horizon Kinetics Inflation | Palm Valley vs. Simplify Interest Rate | Palm Valley vs. Standpoint Multi Asset | Palm Valley vs. Goehring Rozencwajg Resources |
| First Eagle vs. Ab Bond Inflation | First Eagle vs. Blackrock Inflation Protected | First Eagle vs. Ab Bond Inflation | First Eagle vs. Arrow Managed Futures |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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