Correlation Between Blackrock and First Eagle

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

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

Diversification Opportunities for Blackrock and First Eagle

0.88

Correlation Coefficient

Blackrock  First Eagle

Very poor diversification

The 3 months correlation between Blackrock and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Hi Yld and First Eagle High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle High and Blackrock 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 Blackrock Hi Yld 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 High has no effect on the direction of Blackrock i.e., Blackrock and First Eagle go up and down completely randomly.

Pair Corralation between Blackrock and First Eagle

Assuming the 90 days horizon Blackrock Hi Yld is expected to generate 1.17 times more return on investment than First Eagle. However, Blackrock is 1.17 times more volatile than First Eagle High. It trades about 0.12 of its potential returns per unit of risk. First Eagle High is currently generating about 0.13 per unit of risk. If you would invest  639.00  in Blackrock Hi Yld on January 25, 2024 and sell it today you would earn a total of  59.00  from holding Blackrock Hi Yld or generate 9.23% return on investment over 90 days.

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

Blackrock Hi Yld  vs.  First Eagle High

Blackrock Hi Yld

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Hi Yld are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle High

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle High are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock and First Eagle

The main advantage of trading using opposite Blackrock and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock 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 Blackrock Hi Yld and First Eagle High 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.