Correlation Between The Arbitrage and First Eagle

Can any of the company-specific risk be diversified away by investing in both The Arbitrage 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 The Arbitrage and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Arbitrage Event Driven and First Eagle Gold, you can compare the effects of market volatilities on The Arbitrage 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 The Arbitrage with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Arbitrage and First Eagle.

Diversification Opportunities for The Arbitrage and First Eagle

0.6

Correlation Coefficient

The Arbitrage  First Eagle

Poor diversification

The 3 months correlation between THE and First is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Arbitrage Event Driven 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 The Arbitrage 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 The Arbitrage Event Driven 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 The Arbitrage i.e., The Arbitrage and First Eagle go up and down completely randomly.

Pair Corralation between The Arbitrage and First Eagle

Assuming the 90 days horizon The Arbitrage is expected to generate 3.32 times less return on investment than First Eagle. But when comparing it to its historical volatility, The Arbitrage Event Driven is 15.58 times less risky than First Eagle. It trades about 0.4 of its potential returns per unit of risk. First Eagle Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,068  in First Eagle Gold on May 2, 2025 and sell it today you would earn a total of  266.00  from holding First Eagle Gold or generate 8.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Arbitrage Event Driven  vs.  First Eagle Gold

Arbitrage Event

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Event Driven are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Arbitrage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Gold are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Eagle may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with The Arbitrage and First Eagle

The main advantage of trading using opposite The Arbitrage and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Arbitrage 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.

The idea behind The Arbitrage Event Driven and First Eagle Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.