Correlation Between Guidemark(r) Large and First Eagle

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

By analyzing existing cross correlation between Guidemark Large Cap and First Eagle Credit, you can compare the effects of market volatilities on Guidemark(r) Large and First Eagle 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 Guidemark(r) Large with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) Large and First Eagle.

Diversification Opportunities for Guidemark(r) Large and First Eagle

0.65

Correlation Coefficient

Guidemark(r) Large  First Eagle

Poor diversification

The 3 months correlation between Guidemark(r) and First is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and First Eagle Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Credit and Guidemark(r) Large 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 Guidemark Large Cap are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Credit has no effect on the direction of Guidemark(r) Large i.e., Guidemark(r) Large and First Eagle go up and down completely randomly.

Pair Corralation between Guidemark(r) Large and First Eagle

Assuming the 90 days horizon Guidemark Large Cap is expected to under-perform the First Eagle. In addition to that, Guidemark(r) Large is 22.76 times more volatile than First Eagle Credit. It trades about -0.22 of its total potential returns per unit of risk. First Eagle Credit is currently generating about -0.56 per unit of volatility. If you would invest  2,302  in First Eagle Credit on October 9, 2024 and sell it today you would lose (16.00) from holding First Eagle Credit or give up 0.7% of portfolio value over 90 days.

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

Guidemark Large Cap  vs.  First Eagle Credit

Guidemark Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guidemark(r) Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Credit

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Credit are ranked lower than 4 (%) 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.

Pair Trading with Guidemark(r) Large and First Eagle

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

The idea behind Guidemark Large Cap and First Eagle Credit 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.