Correlation Between Midas Fund and First Eagle

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

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

Diversification Opportunities for Midas Fund and First Eagle

0.92

Correlation Coefficient

Midas Fund  First Eagle

Almost no diversification

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

Pair Corralation between Midas Fund and First Eagle

Assuming the 90 days horizon Midas Fund Midas is expected to generate 0.96 times more return on investment than First Eagle. However, Midas Fund Midas is 1.04 times less risky than First Eagle. It trades about 0.18 of its potential returns per unit of risk. First Eagle Gold is currently generating about 0.01 per unit of risk. If you would invest  122.00  in Midas Fund Midas on September 14, 2024 and sell it today you would earn a total of  9.00  from holding Midas Fund Midas or generate 7.38% return on investment over 90 days.

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

Midas Fund Midas  vs.  First Eagle Gold

Midas Fund Midas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midas Fund Midas has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Midas Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Eagle Gold

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Midas Fund and First Eagle

The main advantage of trading using opposite Midas Fund and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midas Fund 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 Midas Fund Midas 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.