diversifiable risk of combining Precious Metals and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals And and First Eagle Gold, you can compare the effects of market volatilities on Precious Metals 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 Precious Metals with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and First Eagle.
Diversification Opportunities for Precious Metals and First Eagle
Pair Corralation between Precious Metals and First Eagle
Assuming the 90 days horizon Precious Metals And is expected to under-perform the First Eagle. In addition to that, Precious Metals is 1.18 times more volatile than First Eagle Gold. It trades about -0.03 of its total potential returns per unit of risk. First Eagle Gold is currently generating about -0.02 per unit of volatility. If you would invest 2,592 in First Eagle Gold on December 1, 2023 and sell it today you would lose (536.00) from holding First Eagle Gold or give up 20.68% of portfolio value over 90 days.
PRECIOUS METALS AND vs. FIRST EAGLE GOLD
Precious Metals and First Eagle Volatility Contrast
Pair Trading with Precious Metals and First EagleThe main advantage of trading using opposite Precious Metals and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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 Precious Metals And and First Eagle Gold 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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