Correlation Between Thornburg Low and First Eagle

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

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

Diversification Opportunities for Thornburg Low and First Eagle

-0.69

Correlation Coefficient

Thornburg Low  First Eagle

Excellent diversification

The 3 months correlation between Thornburg and First is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Low Duration 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 Thornburg Low 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 Thornburg Low Duration 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 Thornburg Low i.e., Thornburg Low and First Eagle go up and down completely randomly.

Pair Corralation between Thornburg Low and First Eagle

Assuming the 90 days horizon Thornburg Low Duration is expected to generate 0.06 times more return on investment than First Eagle. However, Thornburg Low Duration is 15.59 times less risky than First Eagle. It trades about 0.19 of its potential returns per unit of risk. First Eagle Gold is currently generating about -0.07 per unit of risk. If you would invest  1,206  in Thornburg Low Duration on October 26, 2024 and sell it today you would earn a total of  15.00  from holding Thornburg Low Duration or generate 1.24% return on investment over 90 days.

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

Thornburg Low Duration  vs.  First Eagle Gold

Thornburg Low Duration

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Low Duration are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thornburg Low 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 basic 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 Thornburg Low and First Eagle

The main advantage of trading using opposite Thornburg Low and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Low 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 Thornburg Low Duration 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.