Correlation Between Touchstone Mid and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Touchstone Mid and Sterling Capital 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 Touchstone Mid and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Mid Cap and Sterling Capital Equity, you can compare the effects of market volatilities on Touchstone Mid and Sterling Capital 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 Touchstone Mid with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Mid and Sterling Capital.
Diversification Opportunities for Touchstone Mid and Sterling Capital
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Sterling is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Mid Cap and Sterling Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Equity and Touchstone Mid 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 Touchstone Mid Cap are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Equity has no effect on the direction of Touchstone Mid i.e., Touchstone Mid and Sterling Capital go up and down completely randomly.
Pair Corralation between Touchstone Mid and Sterling Capital
Assuming the 90 days horizon Touchstone Mid Cap is expected to generate 1.23 times more return on investment than Sterling Capital. However, Touchstone Mid is 1.23 times more volatile than Sterling Capital Equity. It trades about 0.12 of its potential returns per unit of risk. Sterling Capital Equity is currently generating about 0.11 per unit of risk. If you would invest 2,297 in Touchstone Mid Cap on September 1, 2024 and sell it today you would earn a total of 298.00 from holding Touchstone Mid Cap or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Mid Cap vs. Sterling Capital Equity
Performance |
| Timeline |
| Touchstone Mid Cap |
| Sterling Capital Equity |
Touchstone Mid and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Mid and Sterling Capital
The main advantage of trading using opposite Touchstone Mid and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Mid position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| 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 |
| Sterling Capital vs. Sterling Capital Special | Sterling Capital vs. Sterling Capital Total | Sterling Capital vs. Touchstone Sands Capital | Sterling Capital vs. Aquagold International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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