Correlation Between Small-midcap Dividend and First Eagle

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

By analyzing existing cross correlation between Small Midcap Dividend Income and First Eagle Fund, you can compare the effects of market volatilities on Small-midcap Dividend 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 Small-midcap Dividend with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-midcap Dividend and First Eagle.

Diversification Opportunities for Small-midcap Dividend and First Eagle

0.44

Correlation Coefficient

Small-midcap Dividend  First Eagle

Very weak diversification

The 3 months correlation between Small-midcap and First is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Small Midcap Dividend Income and First Eagle Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Fund and Small-midcap Dividend 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 Small Midcap Dividend Income 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 Fund has no effect on the direction of Small-midcap Dividend i.e., Small-midcap Dividend and First Eagle go up and down completely randomly.

Pair Corralation between Small-midcap Dividend and First Eagle

Assuming the 90 days horizon Small Midcap Dividend Income is expected to under-perform the First Eagle. In addition to that, Small-midcap Dividend is 1.3 times more volatile than First Eagle Fund. It trades about -0.06 of its total potential returns per unit of risk. First Eagle Fund is currently generating about 0.04 per unit of volatility. If you would invest  2,701  in First Eagle Fund on December 30, 2024 and sell it today you would earn a total of  50.00  from holding First Eagle Fund or generate 1.85% return on investment over 90 days.

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

Small Midcap Dividend Income  vs.  First Eagle Fund

Small Midcap Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Midcap Dividend Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Small-midcap Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Small-midcap Dividend and First Eagle

The main advantage of trading using opposite Small-midcap Dividend and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-midcap Dividend 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 Small Midcap Dividend Income and First Eagle Fund 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.