Correlation Between International Investors and First Eagle

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

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

Diversification Opportunities for International Investors and First Eagle

0.88

Correlation Coefficient

International Investors  First Eagle

Very poor diversification

The 3 months correlation between International and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold 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 International Investors 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 International Investors Gold 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 International Investors i.e., International Investors and First Eagle go up and down completely randomly.

Pair Corralation between International Investors and First Eagle

Assuming the 90 days horizon International Investors Gold is expected to generate 1.09 times more return on investment than First Eagle. However, International Investors is 1.09 times more volatile than First Eagle Gold. It trades about 0.34 of its potential returns per unit of risk. First Eagle Gold is currently generating about 0.34 per unit of risk. If you would invest  1,488  in International Investors Gold on October 24, 2024 and sell it today you would earn a total of  136.00  from holding International Investors Gold or generate 9.14% return on investment over 90 days.

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

International Investors Gold  vs.  First Eagle Gold

International Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Investors Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund 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 fundamental 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 International Investors and First Eagle

The main advantage of trading using opposite International Investors and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors 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 International Investors Gold 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.