Correlation Between Ishares Sp and First Eagle

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Can any of the company-specific risk be diversified away by investing in both Ishares Sp 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 Ishares Sp and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Sp 500 and First Eagle Global, you can compare the effects of market volatilities on Ishares Sp 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 Ishares Sp with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Sp and First Eagle.

Diversification Opportunities for Ishares Sp and First Eagle

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ishares and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding IShares SP 500 and FIRST EAGLE GLOBAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Global and Ishares Sp 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 Ishares Sp 500 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 Global has no effect on the direction of Ishares Sp i.e., Ishares Sp and First Eagle go up and down completely randomly.

Pair Corralation between Ishares Sp and First Eagle

Assuming the 90 days horizon Ishares Sp 500 is expected to generate 1.29 times more return on investment than First Eagle. However, Ishares Sp is 1.29 times more volatile than First Eagle Global. It trades about 0.06 of its potential returns per unit of risk. First Eagle Global is currently generating about 0.03 per unit of risk. If you would invest  47,496  in Ishares Sp 500 on December 29, 2023 and sell it today you would earn a total of  14,210  from holding Ishares Sp 500 or generate 29.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy96.26%
ValuesDaily Returns

IShares SP 500  vs.  FIRST EAGLE GLOBAL

 Performance 
       Timeline  
Ishares Sp 500 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Sp 500 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, Ishares Sp may actually be approaching a critical reversion point that can send shares even higher in April 2024.
First Eagle Global 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Modest
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 technical and fundamental indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ishares Sp and First Eagle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ishares Sp and First Eagle

The main advantage of trading using opposite Ishares Sp and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Sp 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 Ishares Sp 500 and First Eagle Global 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.
Check out your portfolio center.
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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