Correlation Between First Eagle and Alternative Asset

Can any of the company-specific risk be diversified away by investing in both First Eagle and Alternative Asset 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 Alternative Asset 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 Alternative Asset Allocation, you can compare the effects of market volatilities on First Eagle and Alternative Asset 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 Alternative Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Alternative Asset.

Diversification Opportunities for First Eagle and Alternative Asset

-0.35

Correlation Coefficient

First Eagle  Alternative Asset

Very good diversification

The 3 months correlation between First and Alternative is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Alternative Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Asset 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 Alternative Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Asset has no effect on the direction of First Eagle i.e., First Eagle and Alternative Asset go up and down completely randomly.

Pair Corralation between First Eagle and Alternative Asset

Assuming the 90 days horizon First Eagle Gold is expected to under-perform the Alternative Asset. In addition to that, First Eagle is 8.77 times more volatile than Alternative Asset Allocation. It trades about -0.06 of its total potential returns per unit of risk. Alternative Asset Allocation is currently generating about 0.13 per unit of volatility. If you would invest  1,598  in Alternative Asset Allocation on September 12, 2024 and sell it today you would earn a total of  26.00  from holding Alternative Asset Allocation or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

First Eagle Gold  vs.  Alternative Asset Allocation

First Eagle Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Eagle Gold has generated negative risk-adjusted returns adding no value to fund investors. 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.

Alternative Asset

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Alternative Asset Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Alternative Asset 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 Alternative Asset

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

The idea behind First Eagle Gold and Alternative Asset Allocation 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.