Correlation Between First Eagle and Mid Cap

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

By analyzing existing cross correlation between First Eagle Small and Mid Cap Growth, you can compare the effects of market volatilities on First Eagle and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Mid Cap.

Diversification Opportunities for First Eagle and Mid Cap

0.91

Correlation Coefficient

First Eagle  Mid Cap

Almost no diversification

The 3 months correlation between First and Mid is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Small and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth 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 Small are associated (or correlated) with Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of First Eagle i.e., First Eagle and Mid Cap go up and down completely randomly.

Pair Corralation between First Eagle and Mid Cap

Assuming the 90 days horizon First Eagle Small is expected to generate 0.66 times more return on investment than Mid Cap. However, First Eagle Small is 1.51 times less risky than Mid Cap. It trades about 0.09 of its potential returns per unit of risk. Mid Cap Growth is currently generating about 0.05 per unit of risk. If you would invest  1,077  in First Eagle Small on September 18, 2024 and sell it today you would earn a total of  15.00  from holding First Eagle Small or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

First Eagle Small  vs.  Mid Cap Growth

First Eagle Small

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Small are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mid Cap Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Eagle and Mid Cap

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

The idea behind First Eagle Small and Mid Cap Growth 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.