Correlation Between American Funds and First Eagle
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and First Eagle Gold, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and First Eagle.
Diversification Opportunities for American Funds and First Eagle
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and First is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement 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 American Funds 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 American Funds Retirement 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 American Funds i.e., American Funds and First Eagle go up and down completely randomly.
Pair Corralation between American Funds and First Eagle
Assuming the 90 days horizon American Funds Retirement is expected to generate 0.19 times more return on investment than First Eagle. However, American Funds Retirement is 5.2 times less risky than First Eagle. It trades about 0.23 of its potential returns per unit of risk. First Eagle Gold is currently generating about -0.13 per unit of risk. If you would invest 1,264 in American Funds Retirement on September 1, 2024 and sell it today you would earn a total of 21.00 from holding American Funds Retirement or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds Retirement vs. First Eagle Gold
Performance |
| Timeline |
| American Funds Retirement |
| First Eagle Gold |
American Funds and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and First Eagle
The main advantage of trading using opposite American Funds and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Mesirow Financial Small | American Funds vs. Davis Financial Fund | American Funds vs. Icon Financial Fund | American Funds vs. Blackrock Financial Institutions |
| First Eagle vs. First Eagle Gold | First Eagle vs. Franklin Gold Precious | First Eagle vs. First Eagle Gold | First Eagle vs. First Eagle Global |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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