Correlation Between Deutsche Core and First Eagle
Can any of the company-specific risk be diversified away by investing in both Deutsche Core 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 Deutsche Core and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche E Equity and First Eagle Gold, you can compare the effects of market volatilities on Deutsche Core 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 Deutsche Core with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Core and First Eagle.
Diversification Opportunities for Deutsche Core and First Eagle
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutsche and First is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche E Equity 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 Deutsche Core 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 Deutsche E Equity 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 Deutsche Core i.e., Deutsche Core and First Eagle go up and down completely randomly.
Pair Corralation between Deutsche Core and First Eagle
Assuming the 90 days horizon Deutsche E Equity is expected to under-perform the First Eagle. In addition to that, Deutsche Core is 1.19 times more volatile than First Eagle Gold. It trades about -0.27 of its total potential returns per unit of risk. First Eagle Gold is currently generating about -0.18 per unit of volatility. If you would invest 2,467 in First Eagle Gold on October 9, 2024 and sell it today you would lose (144.00) from holding First Eagle Gold or give up 5.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche E Equity vs. First Eagle Gold
Performance |
| Timeline |
| Deutsche E Equity |
| First Eagle Gold |
Deutsche Core and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Core and First Eagle
The main advantage of trading using opposite Deutsche Core and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Core 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.| Deutsche Core vs. Wells Fargo Diversified | Deutsche Core vs. Huber Capital Diversified | Deutsche Core vs. Stone Ridge Diversified | Deutsche Core vs. Putnam Diversified Income |
| First Eagle vs. First Eagle Gold | First Eagle vs. First Eagle Gold | First Eagle vs. Franklin Gold Precious | 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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