Correlation Between Federated Mdt and Touchstone Mid
Can any of the company-specific risk be diversified away by investing in both Federated Mdt 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 Federated Mdt and Touchstone Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Mdt Small and Touchstone Mid Cap, you can compare the effects of market volatilities on Federated Mdt 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 Federated Mdt with a short position of Touchstone Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Touchstone Mid.
Diversification Opportunities for Federated Mdt and Touchstone Mid
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Touchstone is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt Small 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 Federated Mdt 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 Federated Mdt Small 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 Federated Mdt i.e., Federated Mdt and Touchstone Mid go up and down completely randomly.
Pair Corralation between Federated Mdt and Touchstone Mid
Assuming the 90 days horizon Federated Mdt Small is expected to generate 1.64 times more return on investment than Touchstone Mid. However, Federated Mdt is 1.64 times more volatile than Touchstone Mid Cap. It trades about 0.12 of its potential returns per unit of risk. Touchstone Mid Cap is currently generating about 0.12 per unit of risk. If you would invest 2,506 in Federated Mdt Small on September 1, 2024 and sell it today you would earn a total of 511.00 from holding Federated Mdt Small or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Mdt Small vs. Touchstone Mid Cap
Performance |
| Timeline |
| Federated Mdt Small |
| Touchstone Mid Cap |
Federated Mdt and Touchstone Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Mdt and Touchstone Mid
The main advantage of trading using opposite Federated Mdt and Touchstone Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mdt 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.| Federated Mdt vs. Touchstone Mid Cap | Federated Mdt vs. Virtus Kar Small Cap | Federated Mdt vs. Mid Cap Growth | Federated Mdt vs. Harding Loevner International |
| Touchstone Mid vs. Mid Cap Growth | Touchstone Mid vs. Federated Mdt Small | Touchstone Mid vs. Causeway International Value | Touchstone Mid vs. Virtus Kar 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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