Correlation Between First Eagle and Balanced Portfolio

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

Diversification Opportunities for First Eagle and Balanced Portfolio

-0.19

Correlation Coefficient

First Eagle  Balanced Portfolio

Good diversification

The 3 months correlation between First and Balanced is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Global and Balanced Portfolio Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Portfolio 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 Balanced Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Portfolio has no effect on the direction of First Eagle i.e., First Eagle and Balanced Portfolio go up and down completely randomly.

Pair Corralation between First Eagle and Balanced Portfolio

Assuming the 90 days horizon First Eagle Global is expected to under-perform the Balanced Portfolio. But the mutual fund apears to be less risky and, when comparing its historical volatility, First Eagle Global is 1.04 times less risky than Balanced Portfolio. The mutual fund trades about -0.3 of its potential returns per unit of risk. The Balanced Portfolio Institutional is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  5,266  in Balanced Portfolio Institutional on October 12, 2024 and sell it today you would lose (123.00) from holding Balanced Portfolio Institutional or give up 2.34% of portfolio value over 90 days.

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

First Eagle Global  vs.  Balanced Portfolio Institution

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 latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Balanced Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balanced Portfolio Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Balanced Portfolio 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 Balanced Portfolio

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

The idea behind First Eagle Global and Balanced Portfolio Institutional 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.