Correlation Between Northern Ultra and Midas Special

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

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

Diversification Opportunities for Northern Ultra and Midas Special

0.57

Correlation Coefficient

Northern Ultra  Midas Special

Very weak diversification

The 3 months correlation between Northern and Midas is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Northern Ultra Short Fixed and Midas Special Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midas Special and Northern Ultra 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 Northern Ultra Short Fixed are associated (or correlated) with Midas Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midas Special has no effect on the direction of Northern Ultra i.e., Northern Ultra and Midas Special go up and down completely randomly.

Pair Corralation between Northern Ultra and Midas Special

Assuming the 90 days horizon Northern Ultra Short Fixed is expected to under-perform the Midas Special. But the mutual fund apears to be less risky and, when comparing its historical volatility, Northern Ultra Short Fixed is 51.1 times less risky than Midas Special. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Midas Special Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,472  in Midas Special Fund on September 24, 2024 and sell it today you would earn a total of  94.00  from holding Midas Special Fund or generate 2.71% return on investment over 90 days.

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

Northern Ultra Short Fixed  vs.  Midas Special Fund

Northern Ultra Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Midas Special

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Midas Special Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Midas Special may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Northern Ultra and Midas Special

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

The idea behind Northern Ultra Short Fixed and Midas Special 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.