Correlation Between Touchstone Large and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Midcap Fund 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 Large and Midcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Large Cap and Midcap Fund R 3, you can compare the effects of market volatilities on Touchstone Large and Midcap Fund 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 Large with a short position of Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Midcap Fund.
Diversification Opportunities for Touchstone Large and Midcap Fund
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Midcap is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Midcap Fund R 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund R and Touchstone Large 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 Large Cap are associated (or correlated) with Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund R has no effect on the direction of Touchstone Large i.e., Touchstone Large and Midcap Fund go up and down completely randomly.
Pair Corralation between Touchstone Large and Midcap Fund
Assuming the 90 days horizon Touchstone Large is expected to generate 1.28 times less return on investment than Midcap Fund. But when comparing it to its historical volatility, Touchstone Large Cap is 1.32 times less risky than Midcap Fund. It trades about 0.13 of its potential returns per unit of risk. Midcap Fund R 3 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,516 in Midcap Fund R 3 on September 4, 2024 and sell it today you would earn a total of 1,009 from holding Midcap Fund R 3 or generate 28.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Large Cap vs. Midcap Fund R 3
Performance |
| Timeline |
| Touchstone Large Cap |
| Midcap Fund R |
Touchstone Large and Midcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and Midcap Fund
The main advantage of trading using opposite Touchstone Large and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Midcap Fund 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 Midcap Fund will offset losses from the drop in Midcap Fund's long position.| Touchstone Large vs. Champlain Mid Cap | Touchstone Large vs. Pace Smallmedium Growth | Touchstone Large vs. Mid Cap Growth | Touchstone Large vs. T Rowe Price |
| Midcap Fund vs. Scharf Global Opportunity | Midcap Fund vs. Legg Mason Global | Midcap Fund vs. Morningstar Global Income | Midcap Fund vs. Ab Global Bond |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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