Correlation Between Barings Global and First Eagle

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

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

Diversification Opportunities for Barings Global and First Eagle

-0.57

Correlation Coefficient

Barings Global  First Eagle

Excellent diversification

The 3 months correlation between Barings and First is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating 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 Barings Global 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 Barings Global Floating 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 Barings Global i.e., Barings Global and First Eagle go up and down completely randomly.

Pair Corralation between Barings Global and First Eagle

Assuming the 90 days horizon Barings Global Floating is expected to generate 0.13 times more return on investment than First Eagle. However, Barings Global Floating is 7.72 times less risky than First Eagle. It trades about -0.26 of its potential returns per unit of risk. First Eagle Fund is currently generating about -0.37 per unit of risk. If you would invest  879.00  in Barings Global Floating on October 7, 2024 and sell it today you would lose (4.00) from holding Barings Global Floating or give up 0.46% of portfolio value over 90 days.

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

Barings Global Floating  vs.  First Eagle Fund

Barings Global Floating

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Floating are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Barings Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Eagle Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Barings Global and First Eagle

The main advantage of trading using opposite Barings Global and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global 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 Barings Global Floating and First Eagle Fund 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.