Correlation Between Multi Manager and First Eagle

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

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

Diversification Opportunities for Multi Manager and First Eagle

-0.36

Correlation Coefficient

Multi Manager  First Eagle

Very good diversification

The 3 months correlation between Multi and First is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager High Yield and First Eagle Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Global and Multi Manager 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 Multi Manager High Yield 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 Global has no effect on the direction of Multi Manager i.e., Multi Manager and First Eagle go up and down completely randomly.

Pair Corralation between Multi Manager and First Eagle

Assuming the 90 days horizon Multi Manager High Yield is expected to generate 0.52 times more return on investment than First Eagle. However, Multi Manager High Yield is 1.93 times less risky than First Eagle. It trades about 0.14 of its potential returns per unit of risk. First Eagle Global is currently generating about 0.05 per unit of risk. If you would invest  725.00  in Multi Manager High Yield on October 25, 2024 and sell it today you would earn a total of  122.00  from holding Multi Manager High Yield or generate 16.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Multi Manager High Yield  vs.  First Eagle Global

Multi Manager High

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Manager High Yield are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi Manager is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 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 Multi Manager and First Eagle

The main advantage of trading using opposite Multi Manager and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Manager 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 Multi Manager High Yield and First Eagle Global 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 CEOs Directory module to screen CEOs from public companies around the world.