Correlation Between Thrivent Small and First Eagle

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

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

Diversification Opportunities for Thrivent Small and First Eagle

-0.4

Correlation Coefficient

Thrivent Small  First Eagle

Very good diversification

The 3 months correlation between Thrivent and First is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Small Cap 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 Thrivent Small 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 Thrivent Small Cap 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 Thrivent Small i.e., Thrivent Small and First Eagle go up and down completely randomly.

Pair Corralation between Thrivent Small and First Eagle

Assuming the 90 days horizon Thrivent Small Cap is expected to under-perform the First Eagle. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thrivent Small Cap is 1.38 times less risky than First Eagle. The mutual fund trades about -0.15 of its potential returns per unit of risk. The First Eagle Gold is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,306  in First Eagle Gold on December 21, 2024 and sell it today you would earn a total of  652.00  from holding First Eagle Gold or generate 28.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Thrivent Small Cap  vs.  First Eagle Gold

Thrivent Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrivent Small Cap 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.

First Eagle Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Gold are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Eagle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thrivent Small and First Eagle

The main advantage of trading using opposite Thrivent Small and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent Small 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 Thrivent Small Cap 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.