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 Smid, 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

0.92

Correlation Coefficient

Financial Industries  First Eagle

Almost no diversification

The 3 months correlation between Financial and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and First Eagle Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Smid 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 Smid 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 is expected to generate 2.27 times less return on investment than First Eagle. But when comparing it to its historical volatility, Financial Industries Fund is 1.19 times less risky than First Eagle. It trades about 0.11 of its potential returns per unit of risk. First Eagle Smid is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,035  in First Eagle Smid on May 4, 2025 and sell it today you would earn a total of  130.00  from holding First Eagle Smid or generate 12.56% 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 Smid

Financial Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Industries Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Financial Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Smid

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Smid are ranked lower than 15 (%) 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 September 2025.

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.

The idea behind Financial Industries Fund and First Eagle Smid 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.