Correlation Between High Yield and First Eagle

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

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

Diversification Opportunities for High Yield and First Eagle

0.92

Correlation Coefficient

High Yield  First Eagle

Almost no diversification

The 3 months correlation between High and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Portfolio and First Eagle Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Funds and High Yield 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 High Yield Portfolio 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 Funds has no effect on the direction of High Yield i.e., High Yield and First Eagle go up and down completely randomly.

Pair Corralation between High Yield and First Eagle

Assuming the 90 days horizon High Yield is expected to generate 1.68 times less return on investment than First Eagle. But when comparing it to its historical volatility, High Yield Portfolio is 4.77 times less risky than First Eagle. It trades about 0.38 of its potential returns per unit of risk. First Eagle Funds is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,142  in First Eagle Funds on May 20, 2025 and sell it today you would earn a total of  59.00  from holding First Eagle Funds or generate 5.17% return on investment over 90 days.

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

High Yield Portfolio  vs.  First Eagle Funds

High Yield Portfolio

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Portfolio are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, High Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Funds

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Funds are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with High Yield and First Eagle

The main advantage of trading using opposite High Yield and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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 High Yield Portfolio and First Eagle Funds 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.