Correlation Between Mid Cap and Touchstone International
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Touchstone International 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 Mid Cap and Touchstone International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Touchstone International Equity, you can compare the effects of market volatilities on Mid Cap and Touchstone International 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 Mid Cap with a short position of Touchstone International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Touchstone International.
Diversification Opportunities for Mid Cap and Touchstone International
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mid and Touchstone is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Touchstone International Equit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone International and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Touchstone International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone International has no effect on the direction of Mid Cap i.e., Mid Cap and Touchstone International go up and down completely randomly.
Pair Corralation between Mid Cap and Touchstone International
Assuming the 90 days horizon Mid Cap Growth is expected to generate 1.35 times more return on investment than Touchstone International. However, Mid Cap is 1.35 times more volatile than Touchstone International Equity. It trades about 0.07 of its potential returns per unit of risk. Touchstone International Equity is currently generating about 0.05 per unit of risk. If you would invest 2,878 in Mid Cap Growth on August 26, 2024 and sell it today you would earn a total of 1,188 from holding Mid Cap Growth or generate 41.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. Touchstone International Equit
Performance |
| Timeline |
| Mid Cap Growth |
| Touchstone International |
Mid Cap and Touchstone International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Touchstone International
The main advantage of trading using opposite Mid Cap and Touchstone International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Touchstone International 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 International will offset losses from the drop in Touchstone International's long position.| Mid Cap vs. Touchstone Sustainability And | Mid Cap vs. Growth Opportunities Fund | Mid Cap vs. Total Return Fund | Mid Cap vs. William Blair 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 Stocks Directory module to find actively traded stocks across global markets.
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