Correlation Between Touchstone International and Manning Napier
Can any of the company-specific risk be diversified away by investing in both Touchstone International and Manning Napier 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 International and Manning Napier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone International Equity and Manning Napier Callodine, you can compare the effects of market volatilities on Touchstone International and Manning Napier 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 International with a short position of Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Manning Napier.
Diversification Opportunities for Touchstone International and Manning Napier
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Touchstone and Manning is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and Manning Napier Callodine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Callodine and Touchstone International 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 International Equity are associated (or correlated) with Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Callodine has no effect on the direction of Touchstone International i.e., Touchstone International and Manning Napier go up and down completely randomly.
Pair Corralation between Touchstone International and Manning Napier
Assuming the 90 days horizon Touchstone International is expected to generate 6.85 times less return on investment than Manning Napier. But when comparing it to its historical volatility, Touchstone International Equity is 1.13 times less risky than Manning Napier. It trades about 0.03 of its potential returns per unit of risk. Manning Napier Callodine is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,056 in Manning Napier Callodine on September 2, 2024 and sell it today you would earn a total of 516.00 from holding Manning Napier Callodine or generate 48.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.27% |
| Values | Daily Returns |
Touchstone International Equit vs. Manning Napier Callodine
Performance |
| Timeline |
| Touchstone International |
| Manning Napier Callodine |
Touchstone International and Manning Napier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and Manning Napier
The main advantage of trading using opposite Touchstone International and Manning Napier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, Manning Napier 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 Manning Napier will offset losses from the drop in Manning Napier's long position.The idea behind Touchstone International Equity and Manning Napier Callodine pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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