Correlation Between First Eagle and Vanguard Windsor

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

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

Diversification Opportunities for First Eagle and Vanguard Windsor

0.86

Correlation Coefficient

First Eagle  Vanguard Windsor

Very poor diversification

The 3 months correlation between First and Vanguard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Small and Vanguard Windsor Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Windsor 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 Small are associated (or correlated) with Vanguard Windsor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Windsor has no effect on the direction of First Eagle i.e., First Eagle and Vanguard Windsor go up and down completely randomly.

Pair Corralation between First Eagle and Vanguard Windsor

Assuming the 90 days horizon First Eagle Small is expected to generate 0.66 times more return on investment than Vanguard Windsor. However, First Eagle Small is 1.5 times less risky than Vanguard Windsor. It trades about -0.18 of its potential returns per unit of risk. Vanguard Windsor Fund is currently generating about -0.12 per unit of risk. If you would invest  1,129  in First Eagle Small on December 2, 2024 and sell it today you would lose (128.00) from holding First Eagle Small or give up 11.34% of portfolio value over 90 days.

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

First Eagle Small  vs.  Vanguard Windsor Fund

First Eagle Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Eagle Small 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.

Vanguard Windsor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Windsor Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with First Eagle and Vanguard Windsor

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

The idea behind First Eagle Small and Vanguard Windsor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.