Correlation Between First Eagle and Disney

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

By analyzing existing cross correlation between First Eagle Fund and The Walt Disney, you can compare the effects of market volatilities on First Eagle and Disney 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 Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Disney.

Diversification Opportunities for First Eagle and Disney

0.59

Correlation Coefficient

First Eagle  Disney

Very weak diversification

The 3 months correlation between First and Disney is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Fund and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Fund are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of First Eagle i.e., First Eagle and Disney go up and down completely randomly.

Pair Corralation between First Eagle and Disney

Assuming the 90 days horizon First Eagle Fund is expected to generate 0.53 times more return on investment than Disney. However, First Eagle Fund is 1.87 times less risky than Disney. It trades about -0.09 of its potential returns per unit of risk. The Walt Disney is currently generating about -0.08 per unit of risk. If you would invest  1,409  in First Eagle Fund on January 26, 2024 and sell it today you would lose (22.00) from holding First Eagle Fund or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

First Eagle Fund  vs.  The Walt Disney

First Eagle Fund

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walt Disney

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Disney showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Eagle and Disney

The main advantage of trading using opposite First Eagle and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.

The idea behind First Eagle Fund and The Walt Disney 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.