Correlation Between Vaalco Energy and First Eagle

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

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

Diversification Opportunities for Vaalco Energy and First Eagle

0.77

Correlation Coefficient

Vaalco Energy  First Eagle

Poor diversification

The 3 months correlation between Vaalco and First is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vaalco Energy 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 Vaalco Energy 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 Vaalco Energy 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 Vaalco Energy i.e., Vaalco Energy and First Eagle go up and down completely randomly.

Pair Corralation between Vaalco Energy and First Eagle

Considering the 90-day investment horizon Vaalco Energy is expected to generate 1.02 times less return on investment than First Eagle. In addition to that, Vaalco Energy is 2.37 times more volatile than First Eagle Small. It trades about 0.08 of its total potential returns per unit of risk. First Eagle Small is currently generating about 0.19 per unit of volatility. If you would invest  913.00  in First Eagle Small on May 4, 2025 and sell it today you would earn a total of  130.00  from holding First Eagle Small or generate 14.24% return on investment over 90 days.

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

Vaalco Energy  vs.  First Eagle Small

Vaalco Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vaalco Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vaalco Energy showed solid returns over the last few months and may actually be approaching a breakup point.

First Eagle Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Small are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Eagle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vaalco Energy and First Eagle

The main advantage of trading using opposite Vaalco Energy and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaalco Energy 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 Vaalco Energy and First Eagle Small 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.