Correlation Between Merck and Touchstone Focused
Can any of the company-specific risk be diversified away by investing in both Merck and Touchstone Focused 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 Merck and Touchstone Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Touchstone Focused Fund, you can compare the effects of market volatilities on Merck and Touchstone Focused 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 Merck with a short position of Touchstone Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Touchstone Focused.
Diversification Opportunities for Merck and Touchstone Focused
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Touchstone is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused and Merck 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 Merck Company are associated (or correlated) with Touchstone Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Focused has no effect on the direction of Merck i.e., Merck and Touchstone Focused go up and down completely randomly.
Pair Corralation between Merck and Touchstone Focused
Considering the 90-day investment horizon Merck Company is expected to under-perform the Touchstone Focused. In addition to that, Merck is 1.71 times more volatile than Touchstone Focused Fund. It trades about -0.1 of its total potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.15 per unit of volatility. If you would invest 6,517 in Touchstone Focused Fund on August 27, 2024 and sell it today you would earn a total of 157.00 from holding Touchstone Focused Fund or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Touchstone Focused Fund
Performance |
| Timeline |
| Merck Company |
| Touchstone Focused |
Merck and Touchstone Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Touchstone Focused
The main advantage of trading using opposite Merck and Touchstone Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Touchstone Focused 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 Focused will offset losses from the drop in Touchstone Focused's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Touchstone Focused vs. Touchstone Small Cap | Touchstone Focused vs. Touchstone Sands Capital | Touchstone Focused vs. Mid Cap Growth | Touchstone Focused vs. Mid Cap Growth |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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