Correlation Between First Eagle and Midas Fund

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

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

Diversification Opportunities for First Eagle and Midas Fund

0.92

Correlation Coefficient

First Eagle  Midas Fund

Almost no diversification

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

Pair Corralation between First Eagle and Midas Fund

Assuming the 90 days horizon First Eagle Gold is expected to under-perform the Midas Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, First Eagle Gold is 1.08 times less risky than Midas Fund. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Midas Fund Midas is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  136.00  in Midas Fund Midas on September 14, 2024 and sell it today you would lose (5.00) from holding Midas Fund Midas or give up 3.68% of portfolio value over 90 days.

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

First Eagle Gold  vs.  Midas Fund Midas

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.

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.

Pair Trading with First Eagle and Midas Fund

The main advantage of trading using opposite First Eagle and Midas Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle 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 First Eagle Gold 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.