Correlation Between Precious Metals and First Eagle

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Can any of the company-specific risk be diversified away by investing in both Precious Metals 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 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

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Precious and FIRST is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding PRECIOUS METALS AND and FIRST EAGLE GOLD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Gold and Precious Metals 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 Precious Metals And 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 Gold has no effect on the direction of Precious Metals i.e., Precious Metals and First Eagle go up and down completely randomly.

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.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

PRECIOUS METALS AND  vs.  FIRST EAGLE GOLD

 Performance 
       Timeline  
Precious Metals And 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in March 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.
First Eagle Gold 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days First Eagle Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in March 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Precious Metals and First Eagle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Precious Metals and First Eagle

The 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.
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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 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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