Correlation Between First Eagle and Sp Smallcap

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

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

Diversification Opportunities for First Eagle and Sp Smallcap

0.35

Correlation Coefficient

First Eagle  Sp Smallcap

Weak diversification

The 3 months correlation between First and SMLKX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Sp Smallcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap Index and First Eagle 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 First Eagle Gold are associated (or correlated) with Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap Index has no effect on the direction of First Eagle i.e., First Eagle and Sp Smallcap go up and down completely randomly.

Pair Corralation between First Eagle and Sp Smallcap

Assuming the 90 days horizon First Eagle Gold is expected to generate 1.58 times more return on investment than Sp Smallcap. However, First Eagle is 1.58 times more volatile than Sp Smallcap Index. It trades about 0.08 of its potential returns per unit of risk. Sp Smallcap Index is currently generating about 0.12 per unit of risk. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

First Eagle Gold  vs.  Sp Smallcap Index

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.

Sp Smallcap Index

Risk-Adjusted Performance

OK

Over the last 90 days Sp Smallcap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak forward-looking signals, Sp Smallcap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with First Eagle and Sp Smallcap

The main advantage of trading using opposite First Eagle and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap's long position.

The idea behind First Eagle Gold and Sp Smallcap Index 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.