Correlation Between IShares MSCI and First Eagle

Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 MSCI 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 MSCI Denmark and First Eagle High, you can compare the effects of market volatilities on IShares MSCI 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 MSCI with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and First Eagle.

Diversification Opportunities for IShares MSCI and First Eagle

0.91

Correlation Coefficient

IShares MSCI  First Eagle

Almost no diversification

The 3 months correlation between IShares and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Denmark 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 IShares MSCI 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 MSCI Denmark 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 IShares MSCI i.e., IShares MSCI and First Eagle go up and down completely randomly.

Pair Corralation between IShares MSCI and First Eagle

Given the investment horizon of 90 days iShares MSCI Denmark is expected to under-perform the First Eagle. In addition to that, IShares MSCI is 3.81 times more volatile than First Eagle High. It trades about -0.15 of its total potential returns per unit of risk. First Eagle High is currently generating about -0.13 per unit of volatility. If you would invest  831.00  in First Eagle High on January 26, 2024 and sell it today you would lose (6.00) from holding First Eagle High or give up 0.72% of portfolio value over 90 days.

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

iShares MSCI Denmark  vs.  First Eagle High

iShares MSCI Denmark

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Denmark are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

First Eagle High

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle High are ranked lower than 15 (%) 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 IShares MSCI and First Eagle

The main advantage of trading using opposite IShares MSCI and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI Denmark 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.