Correlation Between Westwood Income and First Eagle
Can any of the company-specific risk be diversified away by investing in both Westwood Income 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 Westwood Income and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Income Opportunity and First Eagle Global, you can compare the effects of market volatilities on Westwood Income 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 Westwood Income with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Income and First Eagle.
Diversification Opportunities for Westwood Income and First Eagle
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westwood and FIRST is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Income Opportunity 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 Westwood Income 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 Westwood Income Opportunity 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 Westwood Income i.e., Westwood Income and First Eagle go up and down completely randomly.
Pair Corralation between Westwood Income and First Eagle
Assuming the 90 days horizon Westwood Income Opportunity is expected to generate 0.85 times more return on investment than First Eagle. However, Westwood Income Opportunity is 1.17 times less risky than First Eagle. It trades about 0.49 of its potential returns per unit of risk. First Eagle Global is currently generating about 0.05 per unit of risk. If you would invest 1,200 in Westwood Income Opportunity on September 2, 2024 and sell it today you would earn a total of 50.00 from holding Westwood Income Opportunity or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Income Opportunity vs. First Eagle Global
Performance |
| Timeline |
| Westwood Income Oppo |
| First Eagle Global |
Westwood Income and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Income and First Eagle
The main advantage of trading using opposite Westwood Income and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Income 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.| Westwood Income vs. Berwyn Income Fund | Westwood Income vs. Fpa Crescent Fund | Westwood Income vs. Aquagold International | Westwood Income vs. Thrivent High Yield |
| First Eagle vs. Blackrock Gbl Alloc | First Eagle vs. Ivy Asset Strategy | First Eagle vs. Fpa Crescent Fund | First Eagle vs. Templeton Global Bond |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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