Correlation Between Financial Industries and First Eagle
Can any of the company-specific risk be diversified away by investing in both Financial Industries 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 Financial Industries and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and First Eagle Fund, you can compare the effects of market volatilities on Financial Industries 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 Financial Industries with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and First Eagle.
Diversification Opportunities for Financial Industries and First Eagle
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and First Eagle Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Fund and Financial Industries 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 Financial Industries Fund 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 Fund has no effect on the direction of Financial Industries i.e., Financial Industries and First Eagle go up and down completely randomly.
Pair Corralation between Financial Industries and First Eagle
Assuming the 90 days horizon Financial Industries Fund is expected to generate 1.24 times more return on investment than First Eagle. However, Financial Industries is 1.24 times more volatile than First Eagle Fund. It trades about 0.26 of its potential returns per unit of risk. First Eagle Fund is currently generating about 0.32 per unit of risk. If you would invest 1,647 in Financial Industries Fund on April 21, 2025 and sell it today you would earn a total of 274.00 from holding Financial Industries Fund or generate 16.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Financial Industries Fund vs. First Eagle Fund
Performance |
Timeline |
Financial Industries |
First Eagle Fund |
Financial Industries and First Eagle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Financial Industries and First Eagle
The main advantage of trading using opposite Financial Industries and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries 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.Financial Industries vs. Janus Global Technology | Financial Industries vs. Hennessy Technology Fund | Financial Industries vs. Icon Information Technology | Financial Industries vs. Allianzgi Technology Fund |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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