Correlation Between Midas Special and Franklin Dynatech

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

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

Diversification Opportunities for Midas Special and Franklin Dynatech

0.69

Correlation Coefficient

Midas Special  Franklin Dynatech

Poor diversification

The 3 months correlation between Midas and Franklin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Midas Special Fund and Franklin Dynatech Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Dynatech and Midas Special 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 Special Fund are associated (or correlated) with Franklin Dynatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Dynatech has no effect on the direction of Midas Special i.e., Midas Special and Franklin Dynatech go up and down completely randomly.

Pair Corralation between Midas Special and Franklin Dynatech

Assuming the 90 days horizon Midas Special Fund is expected to generate 0.64 times more return on investment than Franklin Dynatech. However, Midas Special Fund is 1.56 times less risky than Franklin Dynatech. It trades about -0.05 of its potential returns per unit of risk. Franklin Dynatech Fund is currently generating about -0.11 per unit of risk. If you would invest  3,460  in Midas Special Fund on December 28, 2024 and sell it today you would lose (129.00) from holding Midas Special Fund or give up 3.73% of portfolio value over 90 days.

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

Midas Special Fund  vs.  Franklin Dynatech Fund

Midas Special

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Midas Special and Franklin Dynatech

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

The idea behind Midas Special Fund and Franklin Dynatech Fund 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.