Correlation Between Mid Cap and Touchstone Focused
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Touchstone Focused 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 Focused 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 Focused Fund, you can compare the effects of market volatilities on Mid Cap and Touchstone Focused 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 Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Touchstone Focused.
Diversification Opportunities for Mid Cap and Touchstone Focused
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 Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused 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 Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Focused has no effect on the direction of Mid Cap i.e., Mid Cap and Touchstone Focused go up and down completely randomly.
Pair Corralation between Mid Cap and Touchstone Focused
Assuming the 90 days horizon Mid Cap Growth is expected to generate 1.41 times more return on investment than Touchstone Focused. However, Mid Cap is 1.41 times more volatile than Touchstone Focused Fund. It trades about 0.1 of its potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.1 per unit of risk. If you would invest 3,215 in Mid Cap Growth on September 1, 2024 and sell it today you would earn a total of 1,303 from holding Mid Cap Growth or generate 40.53% 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 Focused Fund
Performance |
| Timeline |
| Mid Cap Growth |
| Touchstone Focused |
Mid Cap and Touchstone Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Touchstone Focused
The main advantage of trading using opposite Mid Cap and Touchstone Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Touchstone Focused 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 Focused will offset losses from the drop in Touchstone Focused's long position.| Mid Cap vs. Touchstone Mid Cap | Mid Cap vs. Federated Mdt Small | Mid Cap vs. Harding Loevner International | Mid Cap vs. Sterling Capital Equity |
| Touchstone Focused vs. Doubleline Emerging Markets | Touchstone Focused vs. Angel Oak Multi Strategy | Touchstone Focused vs. Eagle Mlp Strategy | Touchstone Focused vs. Pace International Emerging |
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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