Correlation Between Meridian Equity and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Meridian Equity and Touchstone Small 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 Meridian Equity and Touchstone Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Equity Income and Touchstone Small Cap, you can compare the effects of market volatilities on Meridian Equity and Touchstone Small 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 Meridian Equity with a short position of Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Equity and Touchstone Small.
Diversification Opportunities for Meridian Equity and Touchstone Small
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meridian and Touchstone is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Equity Income and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Meridian Equity 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 Meridian Equity Income are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Meridian Equity i.e., Meridian Equity and Touchstone Small go up and down completely randomly.
Pair Corralation between Meridian Equity and Touchstone Small
Assuming the 90 days horizon Meridian Equity Income is expected to under-perform the Touchstone Small. In addition to that, Meridian Equity is 3.16 times more volatile than Touchstone Small Cap. It trades about -0.21 of its total potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.24 per unit of volatility. If you would invest 3,793 in Touchstone Small Cap on October 20, 2024 and sell it today you would earn a total of 156.00 from holding Touchstone Small Cap or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridian Equity Income vs. Touchstone Small Cap
Performance |
| Timeline |
| Meridian Equity Income |
| Touchstone Small Cap |
Meridian Equity and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Equity and Touchstone Small
The main advantage of trading using opposite Meridian Equity and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Equity position performs unexpectedly, Touchstone Small 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 Small will offset losses from the drop in Touchstone Small's long position.| Meridian Equity vs. Stringer Growth Fund | Meridian Equity vs. Artisan Small Cap | Meridian Equity vs. Morningstar Aggressive Growth | Meridian Equity vs. Transamerica Capital Growth |
| Touchstone Small vs. Ab Large Cap | Touchstone Small vs. Dodge Cox Stock | Touchstone Small vs. Blackrock Large Cap | Touchstone Small vs. Smead Value Fund |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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