Correlation Between Touchstone Mid and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Touchstone Mid and Federated Mdt 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 Federated Mdt 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 Federated Mdt Small, you can compare the effects of market volatilities on Touchstone Mid and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Mid and Federated Mdt.
Diversification Opportunities for Touchstone Mid and Federated Mdt
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Federated is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Mid Cap and Federated Mdt Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Small 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Small has no effect on the direction of Touchstone Mid i.e., Touchstone Mid and Federated Mdt go up and down completely randomly.
Pair Corralation between Touchstone Mid and Federated Mdt
Assuming the 90 days horizon Touchstone Mid is expected to generate 1.78 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Touchstone Mid Cap is 1.51 times less risky than Federated Mdt. It trades about 0.06 of its potential returns per unit of risk. Federated Mdt Small is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,053 in Federated Mdt Small on August 30, 2024 and sell it today you would earn a total of 955.00 from holding Federated Mdt Small or generate 46.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Mid Cap vs. Federated Mdt Small
Performance |
| Timeline |
| Touchstone Mid Cap |
| Federated Mdt Small |
Touchstone Mid and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Mid and Federated Mdt
The main advantage of trading using opposite Touchstone Mid and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Mid position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt'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 |
| Federated Mdt vs. Putnam Equity Income | Federated Mdt vs. Putnam Growth Opportunities | Federated Mdt vs. HUMANA INC | Federated Mdt 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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