Correlation Between Deutsche Gold and First Eagle

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

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

Diversification Opportunities for Deutsche Gold and First Eagle

0.94

Correlation Coefficient

Deutsche Gold  First Eagle

Almost no diversification

The 3 months correlation between Deutsche and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Gold Precious 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 Deutsche Gold 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 Deutsche Gold Precious 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 Deutsche Gold i.e., Deutsche Gold and First Eagle go up and down completely randomly.

Pair Corralation between Deutsche Gold and First Eagle

Assuming the 90 days horizon Deutsche Gold Precious is expected to generate 0.98 times more return on investment than First Eagle. However, Deutsche Gold Precious is 1.02 times less risky than First Eagle. It trades about -0.04 of its potential returns per unit of risk. First Eagle Gold is currently generating about -0.09 per unit of risk. If you would invest  5,661  in Deutsche Gold Precious on October 7, 2024 and sell it today you would lose (297.00) from holding Deutsche Gold Precious or give up 5.25% of portfolio value over 90 days.

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

Deutsche Gold Precious  vs.  First Eagle Gold

Deutsche Gold Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Gold Precious has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Deutsche Gold 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 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 Deutsche Gold and First Eagle

The main advantage of trading using opposite Deutsche Gold and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Gold 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 Deutsche Gold Precious 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.