Correlation Between First Eagle and T Rowe

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

By analyzing existing cross correlation between First Eagle Credit and T Rowe Price, you can compare the effects of market volatilities on First Eagle and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and T Rowe.

Diversification Opportunities for First Eagle and T Rowe

-0.11

Correlation Coefficient

First Eagle  T Rowe

Good diversification

The 3 months correlation between First and PRINX is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Credit and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 Credit are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of First Eagle i.e., First Eagle and T Rowe go up and down completely randomly.

Pair Corralation between First Eagle and T Rowe

Assuming the 90 days horizon First Eagle Credit is expected to under-perform the T Rowe. But the mutual fund apears to be less risky and, when comparing its historical volatility, First Eagle Credit is 7.64 times less risky than T Rowe. The mutual fund trades about -0.15 of its potential returns per unit of risk. The T Rowe Price is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,133  in T Rowe Price on September 16, 2024 and sell it today you would earn a total of  2.00  from holding T Rowe Price or generate 0.18% return on investment over 90 days.

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

First Eagle Credit  vs.  T Rowe Price

First Eagle Credit

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Credit 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.

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with First Eagle and T Rowe

The main advantage of trading using opposite First Eagle and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind First Eagle Credit and T Rowe Price 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.