Correlation Between Us Government and First Eagle
Can any of the company-specific risk be diversified away by investing in both Us 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 Us 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 Us Government Securities and First Eagle Gold, you can compare the effects of market volatilities on Us 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 Us Government with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and First Eagle.
Diversification Opportunities for Us Government and First Eagle
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RGVCX and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us 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 Us Government Securities 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 Us Government i.e., Us Government and First Eagle go up and down completely randomly.
Pair Corralation between Us Government and First Eagle
Assuming the 90 days horizon Us Government is expected to generate 7.89 times less return on investment than First Eagle. But when comparing it to its historical volatility, Us Government Securities is 3.34 times less risky than First Eagle. It trades about 0.01 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 2,365 in First Eagle Gold on September 3, 2024 and sell it today you would earn a total of 124.00 from holding First Eagle Gold or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 30.71% |
| Values | Daily Returns |
Us Government Securities vs. First Eagle Gold
Performance |
| Timeline |
| Us Government Securities |
| First Eagle Gold |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Us Government and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and First Eagle
The main advantage of trading using opposite Us Government and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us 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.| Us Government vs. Baillie Gifford Health | Us Government vs. Eventide Healthcare Life | Us Government vs. Alphacentric Lifesci Healthcare | Us Government vs. Health Biotchnology Portfolio |
| First Eagle vs. Us Government Securities | First Eagle vs. Dws Government Money | First Eagle vs. Inverse Government Long | First Eagle vs. Prudential Government Income |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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