Correlation Between Ultra Short and First Eagle
Can any of the company-specific risk be diversified away by investing in both Ultra Short 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 Ultra Short and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Short Fixed Income and First Eagle Small, you can compare the effects of market volatilities on Ultra Short 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 Ultra Short with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Short and First Eagle.
Diversification Opportunities for Ultra Short and First Eagle
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ultra and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Short Fixed Income and First Eagle Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Small and Ultra Short 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 Ultra Short Fixed Income 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 Small has no effect on the direction of Ultra Short i.e., Ultra Short and First Eagle go up and down completely randomly.
Pair Corralation between Ultra Short and First Eagle
Assuming the 90 days horizon Ultra Short is expected to generate 3.1 times less return on investment than First Eagle. But when comparing it to its historical volatility, Ultra Short Fixed Income is 13.58 times less risky than First Eagle. It trades about 0.24 of its potential returns per unit of risk. First Eagle Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 824.00 in First Eagle Small on September 13, 2024 and sell it today you would earn a total of 287.00 from holding First Eagle Small or generate 34.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ultra Short Fixed Income vs. First Eagle Small
Performance |
| Timeline |
| Ultra Short Fixed |
| First Eagle Small |
Ultra Short and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Short and First Eagle
The main advantage of trading using opposite Ultra Short and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Short 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.| Ultra Short vs. Ab Global Risk | Ultra Short vs. Morningstar Aggressive Growth | Ultra Short vs. Ab High Income | Ultra Short vs. Us High Relative |
| First Eagle vs. Old Westbury Large | First Eagle vs. Washington Mutual Investors | First Eagle vs. Guidemark Large Cap | First Eagle vs. T Rowe Price |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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