Correlation Between Blackrock Smid-cap and First Eagle

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

By analyzing existing cross correlation between Blackrock Smid Cap Growth and First Eagle Credit, you can compare the effects of market volatilities on Blackrock Smid-cap 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 Blackrock Smid-cap with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Smid-cap and First Eagle.

Diversification Opportunities for Blackrock Smid-cap and First Eagle

0.56

Correlation Coefficient

Blackrock Smid-cap  First Eagle

Very weak diversification

The 3 months correlation between Blackrock and First is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Smid Cap Growth and First Eagle Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Credit and Blackrock Smid-cap 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 Blackrock Smid Cap Growth 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 Credit has no effect on the direction of Blackrock Smid-cap i.e., Blackrock Smid-cap and First Eagle go up and down completely randomly.

Pair Corralation between Blackrock Smid-cap and First Eagle

Assuming the 90 days horizon Blackrock Smid-cap is expected to generate 2.03 times less return on investment than First Eagle. In addition to that, Blackrock Smid-cap is 6.09 times more volatile than First Eagle Credit. It trades about 0.01 of its total potential returns per unit of risk. First Eagle Credit is currently generating about 0.11 per unit of volatility. If you would invest  2,266  in First Eagle Credit on October 22, 2024 and sell it today you would earn a total of  18.00  from holding First Eagle Credit or generate 0.79% return on investment over 90 days.

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

Blackrock Smid Cap Growth  vs.  First Eagle Credit

Blackrock Smid Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Smid Cap Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Smid-cap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

First Eagle Credit

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Credit are ranked lower than 9 (%) 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 Blackrock Smid-cap and First Eagle

The main advantage of trading using opposite Blackrock Smid-cap and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Smid-cap 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 Blackrock Smid Cap Growth and First Eagle Credit 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.