Correlation Between Mid Cap and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Touchstone Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Mid Cap and Touchstone Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Touchstone Small.
Diversification Opportunities for Mid Cap and Touchstone Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and Touchstone is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Mid Cap i.e., Mid Cap and Touchstone Small go up and down completely randomly.
Pair Corralation between Mid Cap and Touchstone Small
Assuming the 90 days horizon Mid Cap Growth is expected to generate 0.85 times more return on investment than Touchstone Small. However, Mid Cap Growth is 1.18 times less risky than Touchstone Small. It trades about 0.38 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.25 per unit of risk. If you would invest 3,734 in Mid Cap Growth on August 30, 2024 and sell it today you would earn a total of 418.00 from holding Mid Cap Growth or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. Touchstone Small Cap
Performance |
| Timeline |
| Mid Cap Growth |
| Touchstone Small Cap |
Mid Cap and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Touchstone Small
The main advantage of trading using opposite Mid Cap and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Touchstone Small 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 Small will offset losses from the drop in Touchstone Small'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 |
| Touchstone Small vs. T Rowe Price | Touchstone Small vs. Kinetics Global Fund | Touchstone Small vs. Power Global Tactical | Touchstone Small vs. Dreyfusstandish Global Fixed |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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