Correlation Between Franklin Dynatech and Midas Fund

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

By analyzing existing cross correlation between Franklin Dynatech Fund and Midas Fund Midas, you can compare the effects of market volatilities on Franklin Dynatech and Midas Fund 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 Franklin Dynatech with a short position of Midas Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Dynatech and Midas Fund.

Diversification Opportunities for Franklin Dynatech and Midas Fund

-0.56

Correlation Coefficient

Franklin Dynatech  Midas Fund

Excellent diversification

The 3 months correlation between Franklin and Midas is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Dynatech Fund and Midas Fund Midas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midas Fund Midas and Franklin Dynatech 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 Franklin Dynatech Fund are associated (or correlated) with Midas Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midas Fund Midas has no effect on the direction of Franklin Dynatech i.e., Franklin Dynatech and Midas Fund go up and down completely randomly.

Pair Corralation between Franklin Dynatech and Midas Fund

Assuming the 90 days horizon Franklin Dynatech Fund is expected to under-perform the Midas Fund. In addition to that, Franklin Dynatech is 1.12 times more volatile than Midas Fund Midas. It trades about -0.11 of its total potential returns per unit of risk. Midas Fund Midas is currently generating about 0.36 per unit of volatility. If you would invest  118.00  in Midas Fund Midas on December 28, 2024 and sell it today you would earn a total of  48.00  from holding Midas Fund Midas or generate 40.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Franklin Dynatech Fund  vs.  Midas Fund Midas

Franklin Dynatech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Dynatech Fund 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Midas Fund Midas

Risk-Adjusted Performance

Strong

Over the last 90 days Midas Fund Midas has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Midas Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franklin Dynatech and Midas Fund

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

The idea behind Franklin Dynatech Fund and Midas Fund Midas 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.