Correlation Between Vanguard FTSE and First Eagle

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

By analyzing existing cross correlation between Vanguard FTSE All World and First Eagle High, you can compare the effects of market volatilities on Vanguard FTSE 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 Vanguard FTSE with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and First Eagle.

Diversification Opportunities for Vanguard FTSE and First Eagle

0.92

Correlation Coefficient

Vanguard FTSE  First Eagle

Almost no diversification

The 3 months correlation between Vanguard and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE All World 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 Vanguard FTSE 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 Vanguard FTSE All World 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 Vanguard FTSE i.e., Vanguard FTSE and First Eagle go up and down completely randomly.

Pair Corralation between Vanguard FTSE and First Eagle

Considering the 90-day investment horizon Vanguard FTSE All World is expected to generate 3.17 times more return on investment than First Eagle. However, Vanguard FTSE is 3.17 times more volatile than First Eagle High. It trades about 0.09 of its potential returns per unit of risk. First Eagle High is currently generating about 0.13 per unit of risk. If you would invest  4,350  in Vanguard FTSE All World on January 26, 2024 and sell it today you would earn a total of  1,381  from holding Vanguard FTSE All World or generate 31.75% return on investment over 90 days.

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

Vanguard FTSE All World  vs.  First Eagle High

Vanguard FTSE All

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE All World are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

First Eagle High

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle High are ranked lower than 16 (%) 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 Vanguard FTSE and First Eagle

The main advantage of trading using opposite Vanguard FTSE and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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 Vanguard FTSE All World 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.