Correlation Between First Eagle and Baron Durable

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

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

Diversification Opportunities for First Eagle and Baron Durable

-0.49

Correlation Coefficient

First Eagle  Baron Durable

Very good diversification

The 3 months correlation between First and Baron is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Baron Durable Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Durable Advantage 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 Gold are associated (or correlated) with Baron Durable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Durable Advantage has no effect on the direction of First Eagle i.e., First Eagle and Baron Durable go up and down completely randomly.

Pair Corralation between First Eagle and Baron Durable

Assuming the 90 days horizon First Eagle Gold is expected to generate 1.14 times more return on investment than Baron Durable. However, First Eagle is 1.14 times more volatile than Baron Durable Advantage. It trades about 0.31 of its potential returns per unit of risk. Baron Durable Advantage is currently generating about -0.07 per unit of risk. If you would invest  2,269  in First Eagle Gold on December 28, 2024 and sell it today you would earn a total of  653.00  from holding First Eagle Gold or generate 28.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

First Eagle Gold  vs.  Baron Durable Advantage

First Eagle Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Gold are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Eagle showed solid returns over the last few months and may actually be approaching a breakup point.

Baron Durable Advantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Durable Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Baron Durable 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 Baron Durable

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

The idea behind First Eagle Gold and Baron Durable Advantage 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..