Correlation Between First Eagle and PAR Technology

Can any of the company-specific risk be diversified away by investing in both First Eagle and PAR Technology 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 PAR Technology 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 PAR Technology, you can compare the effects of market volatilities on First Eagle and PAR Technology 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 PAR Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and PAR Technology.

Diversification Opportunities for First Eagle and PAR Technology

-0.26

Correlation Coefficient

First Eagle  PAR Technology

Very good diversification

The 3 months correlation between First and PAR is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Fund and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR Technology 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 PAR Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR Technology has no effect on the direction of First Eagle i.e., First Eagle and PAR Technology go up and down completely randomly.

Pair Corralation between First Eagle and PAR Technology

Assuming the 90 days horizon First Eagle Fund is expected to generate 0.36 times more return on investment than PAR Technology. However, First Eagle Fund is 2.78 times less risky than PAR Technology. It trades about -0.18 of its potential returns per unit of risk. PAR Technology is currently generating about -0.07 per unit of risk. If you would invest  2,449  in First Eagle Fund on January 24, 2024 and sell it today you would lose (68.00) from holding First Eagle Fund or give up 2.78% of portfolio value over 90 days.

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

First Eagle Fund  vs.  PAR Technology

First Eagle Fund

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Fund are ranked lower than 3 (%) 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.

PAR Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAR Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with First Eagle and PAR Technology

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

The idea behind First Eagle Fund and PAR Technology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.