Correlation Between Meridian Equity and Touchstone Premium
Can any of the company-specific risk be diversified away by investing in both Meridian Equity and Touchstone Premium 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 Premium 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 Premium Yield, you can compare the effects of market volatilities on Meridian Equity and Touchstone Premium 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 Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Equity and Touchstone Premium.
Diversification Opportunities for Meridian Equity and Touchstone Premium
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meridian and Touchstone is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Equity Income and Touchstone Premium Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Premium Yield 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 Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Premium Yield has no effect on the direction of Meridian Equity i.e., Meridian Equity and Touchstone Premium go up and down completely randomly.
Pair Corralation between Meridian Equity and Touchstone Premium
Assuming the 90 days horizon Meridian Equity Income is expected to generate 0.6 times more return on investment than Touchstone Premium. However, Meridian Equity Income is 1.67 times less risky than Touchstone Premium. It trades about 0.12 of its potential returns per unit of risk. Touchstone Premium Yield is currently generating about 0.06 per unit of risk. If you would invest 1,301 in Meridian Equity Income on September 1, 2024 and sell it today you would earn a total of 124.00 from holding Meridian Equity Income or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Meridian Equity Income vs. Touchstone Premium Yield
Performance |
| Timeline |
| Meridian Equity Income |
| Touchstone Premium Yield |
Meridian Equity and Touchstone Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Equity and Touchstone Premium
The main advantage of trading using opposite Meridian Equity and Touchstone Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Equity position performs unexpectedly, Touchstone Premium 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 Premium will offset losses from the drop in Touchstone Premium's long position.| Meridian Equity vs. Meridian Equity Income | Meridian Equity vs. Meridian Growth Fund | Meridian Equity vs. Meridian Growth Fund | Meridian Equity vs. Meridian Equity Income |
| Touchstone Premium vs. Ab Small Cap | Touchstone Premium vs. Touchstone Small Cap | Touchstone Premium vs. Jpmorgan Small Cap | Touchstone Premium vs. Artisan Small Cap |
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.
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