Correlation Between GM and Touchstone Mid
Can any of the company-specific risk be diversified away by investing in both GM and Touchstone Mid 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 GM and Touchstone Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Touchstone Mid Cap, you can compare the effects of market volatilities on GM and Touchstone Mid 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 GM with a short position of Touchstone Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Touchstone Mid.
Diversification Opportunities for GM and Touchstone Mid
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Touchstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Touchstone Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Mid Cap and GM 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 General Motors are associated (or correlated) with Touchstone Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Mid Cap has no effect on the direction of GM i.e., GM and Touchstone Mid go up and down completely randomly.
Pair Corralation between GM and Touchstone Mid
Allowing for the 90-day total investment horizon GM is expected to generate 1.45 times less return on investment than Touchstone Mid. In addition to that, GM is 2.2 times more volatile than Touchstone Mid Cap. It trades about 0.12 of its total potential returns per unit of risk. Touchstone Mid Cap is currently generating about 0.38 per unit of volatility. If you would invest 4,073 in Touchstone Mid Cap on August 31, 2024 and sell it today you would earn a total of 456.00 from holding Touchstone Mid Cap or generate 11.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Touchstone Mid Cap
Performance |
| Timeline |
| General Motors |
| Touchstone Mid Cap |
GM and Touchstone Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Touchstone Mid
The main advantage of trading using opposite GM and Touchstone Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Touchstone Mid 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 Touchstone Mid will offset losses from the drop in Touchstone Mid's long position.The idea behind General Motors and Touchstone Mid Cap 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.| Touchstone Mid vs. Us Global Investors | Touchstone Mid vs. Wasatch Global Opportunities | Touchstone Mid vs. T Rowe Price | Touchstone Mid vs. Dreyfusstandish Global Fixed |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |