Correlation Between First Eagle and Oppenheimer Developing

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

By analyzing existing cross correlation between First Eagle Global and Oppenheimer Developing Markets, you can compare the effects of market volatilities on First Eagle and Oppenheimer Developing 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 Oppenheimer Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Oppenheimer Developing.

Diversification Opportunities for First Eagle and Oppenheimer Developing

0.64

Correlation Coefficient

First Eagle  Oppenheimer Developing

Poor diversification

The 3 months correlation between FIRST and Oppenheimer is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Global and Oppenheimer Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Developing 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 Global are associated (or correlated) with Oppenheimer Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Developing has no effect on the direction of First Eagle i.e., First Eagle and Oppenheimer Developing go up and down completely randomly.

Pair Corralation between First Eagle and Oppenheimer Developing

Assuming the 90 days horizon First Eagle Global is expected to under-perform the Oppenheimer Developing. But the mutual fund apears to be less risky and, when comparing its historical volatility, First Eagle Global is 1.3 times less risky than Oppenheimer Developing. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Oppenheimer Developing Markets is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,902  in Oppenheimer Developing Markets on December 3, 2024 and sell it today you would lose (26.00) from holding Oppenheimer Developing Markets or give up 0.67% of portfolio value over 90 days.

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

First Eagle Global  vs.  Oppenheimer Developing Markets

First Eagle Global

Risk-Adjusted Performance

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 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.

Oppenheimer Developing

Risk-Adjusted Performance

Very Weak

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

Pair Trading with First Eagle and Oppenheimer Developing

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

The idea behind First Eagle Global and Oppenheimer Developing Markets 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.