Correlation Between First Eagle and Vanguard Precious
Can any of the company-specific risk be diversified away by investing in both First Eagle and Vanguard Precious 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 Vanguard Precious 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 Vanguard Precious Metals, you can compare the effects of market volatilities on First Eagle and Vanguard Precious 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 Vanguard Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Vanguard Precious.
Diversification Opportunities for First Eagle and Vanguard Precious
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Vanguard Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Precious Metals 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 Vanguard Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Precious Metals has no effect on the direction of First Eagle i.e., First Eagle and Vanguard Precious go up and down completely randomly.
Pair Corralation between First Eagle and Vanguard Precious
Assuming the 90 days horizon First Eagle Gold is expected to generate 2.15 times more return on investment than Vanguard Precious. However, First Eagle is 2.15 times more volatile than Vanguard Precious Metals. It trades about 0.3 of its potential returns per unit of risk. Vanguard Precious Metals is currently generating about 0.16 per unit of risk. If you would invest 2,367 in First Eagle Gold on January 26, 2024 and sell it today you would earn a total of 240.00 from holding First Eagle Gold or generate 10.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
First Eagle Gold vs. Vanguard Precious Metals
Performance |
Timeline |
First Eagle Gold |
Vanguard Precious Metals |
First Eagle and Vanguard Precious Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Eagle and Vanguard Precious
The main advantage of trading using opposite First Eagle and Vanguard Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Vanguard Precious 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 Vanguard Precious will offset losses from the drop in Vanguard Precious' long position.The idea behind First Eagle Gold and Vanguard Precious Metals 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.Vanguard Precious vs. Vanguard Energy Fund | Vanguard Precious vs. Vanguard Emerging Markets | Vanguard Precious vs. Vanguard Reit Index | Vanguard Precious vs. Vanguard Pacific Stock |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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