Correlation Between Mid Cap and Touchstone Dividend
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Touchstone Dividend 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 Dividend 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 Dividend Equity, you can compare the effects of market volatilities on Mid Cap and Touchstone Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Touchstone Dividend.
Diversification Opportunities for Mid Cap and Touchstone Dividend
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and Touchstone is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Touchstone Dividend Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Dividend 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Dividend has no effect on the direction of Mid Cap i.e., Mid Cap and Touchstone Dividend go up and down completely randomly.
Pair Corralation between Mid Cap and Touchstone Dividend
Assuming the 90 days horizon Mid Cap Growth is expected to under-perform the Touchstone Dividend. In addition to that, Mid Cap is 2.55 times more volatile than Touchstone Dividend Equity. It trades about -0.21 of its total potential returns per unit of risk. Touchstone Dividend Equity is currently generating about 0.08 per unit of volatility. If you would invest 1,865 in Touchstone Dividend Equity on December 1, 2024 and sell it today you would earn a total of 19.00 from holding Touchstone Dividend Equity or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mid Cap Growth vs. Touchstone Dividend Equity
Performance |
| Timeline |
| Mid Cap Growth |
| Touchstone Dividend |
Mid Cap and Touchstone Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Touchstone Dividend
The main advantage of trading using opposite Mid Cap and Touchstone Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Touchstone Dividend 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 Dividend will offset losses from the drop in Touchstone Dividend's long position.| Mid Cap vs. Wasatch Small Cap | Mid Cap vs. Victory Trivalent International | Mid Cap vs. John Hancock Disciplined | Mid Cap vs. Mfs Mid Cap |
| Touchstone Dividend vs. Touchstone Small Cap | Touchstone Dividend vs. Touchstone Sands Capital | Touchstone Dividend vs. Mid Cap Growth | Touchstone Dividend vs. Mid Cap Growth |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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