Correlation Between First Eagle and Europac Gold

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

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

Diversification Opportunities for First Eagle and Europac Gold

0.99

Correlation Coefficient

First Eagle  Europac Gold

No risk reduction

The 3 months correlation between First and Europac is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and First Eagle 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 First Eagle Gold are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of First Eagle i.e., First Eagle and Europac Gold go up and down completely randomly.

Pair Corralation between First Eagle and Europac Gold

Assuming the 90 days horizon First Eagle Gold is expected to generate 0.84 times more return on investment than Europac Gold. However, First Eagle Gold is 1.19 times less risky than Europac Gold. It trades about 0.33 of its potential returns per unit of risk. Europac Gold Fund is currently generating about 0.24 per unit of risk. If you would invest  2,518  in First Eagle Gold on December 29, 2024 and sell it today you would earn a total of  794.00  from holding First Eagle Gold or generate 31.53% return on investment over 90 days.

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

First Eagle Gold  vs.  Europac Gold Fund

First Eagle Gold

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Gold are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, First Eagle showed solid returns over the last few months and may actually be approaching a breakup point.

Europac Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Europac Gold Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Europac Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Eagle and Europac Gold

The main advantage of trading using opposite First Eagle and Europac Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Europac Gold 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 Europac Gold will offset losses from the drop in Europac Gold's long position.

The idea behind First Eagle Gold and Europac Gold 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .