Correlation Between First Eagle and Great-west Goldman

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

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

Diversification Opportunities for First Eagle and Great-west Goldman

-0.24

Correlation Coefficient

First Eagle  Great-west Goldman

Very good diversification

The 3 months correlation between First and Great-west is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Global and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman and First Eagle 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 First Eagle Global are associated (or correlated) with Great-west Goldman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of First Eagle i.e., First Eagle and Great-west Goldman go up and down completely randomly.

Pair Corralation between First Eagle and Great-west Goldman

Assuming the 90 days horizon First Eagle is expected to generate 47.62 times less return on investment than Great-west Goldman. But when comparing it to its historical volatility, First Eagle Global is 2.11 times less risky than Great-west Goldman. It trades about 0.01 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  934.00  in Great West Goldman Sachs on September 5, 2024 and sell it today you would earn a total of  83.00  from holding Great West Goldman Sachs or generate 8.89% return on investment over 90 days.

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

First Eagle Global  vs.  Great West Goldman Sachs

First Eagle Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Eagle Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West Goldman

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Goldman Sachs are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Great-west Goldman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Eagle and Great-west Goldman

The main advantage of trading using opposite First Eagle and Great-west Goldman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Great-west Goldman 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 Great-west Goldman will offset losses from the drop in Great-west Goldman's long position.

The idea behind First Eagle Global and Great West Goldman Sachs 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.