Correlation Between Hood River and First Eagle

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

By analyzing existing cross correlation between Hood River International and First Eagle Gold, you can compare the effects of market volatilities on Hood River 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 Hood River with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hood River and First Eagle.

Diversification Opportunities for Hood River and First Eagle

-0.53

Correlation Coefficient

Hood River  First Eagle

Excellent diversification

The 3 months correlation between Hood and First is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hood River International and First Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Gold and Hood River 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 Hood River International 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 Gold has no effect on the direction of Hood River i.e., Hood River and First Eagle go up and down completely randomly.

Pair Corralation between Hood River and First Eagle

Assuming the 90 days horizon Hood River International is expected to generate 0.71 times more return on investment than First Eagle. However, Hood River International is 1.41 times less risky than First Eagle. It trades about 0.08 of its potential returns per unit of risk. First Eagle Gold is currently generating about 0.02 per unit of risk. If you would invest  902.00  in Hood River International on October 9, 2024 and sell it today you would earn a total of  305.00  from holding Hood River International or generate 33.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	69.22%
Values	Daily Returns

Hood River International  vs.  First Eagle Gold

Hood River International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hood River International are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Hood River is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 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.

Pair Trading with Hood River and First Eagle

The main advantage of trading using opposite Hood River and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hood River 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 Hood River International and First Eagle Gold 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.