Correlation Between Touchstone International and M Large
Can any of the company-specific risk be diversified away by investing in both Touchstone International and M Large 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 M Large 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 M Large Cap, you can compare the effects of market volatilities on Touchstone International and M Large 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 M Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and M Large.
Diversification Opportunities for Touchstone International and M Large
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Touchstone and MTCGX is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Touchstone International i.e., Touchstone International and M Large go up and down completely randomly.
Pair Corralation between Touchstone International and M Large
Assuming the 90 days horizon Touchstone International Equity is expected to under-perform the M Large. In addition to that, Touchstone International is 1.32 times more volatile than M Large Cap. It trades about -0.15 of its total potential returns per unit of risk. M Large Cap is currently generating about 0.04 per unit of volatility. If you would invest 3,732 in M Large Cap on September 14, 2024 and sell it today you would earn a total of 25.00 from holding M Large Cap or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone International Equit vs. M Large Cap
Performance |
| Timeline |
| Touchstone International |
| M Large Cap |
Touchstone International and M Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and M Large
The main advantage of trading using opposite Touchstone International and M Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, M Large 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 M Large will offset losses from the drop in M Large's long position.The idea behind Touchstone International Equity and M Large Cap 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.
| M Large vs. Alliancebernstein National Municipal | M Large vs. Transamerica Intermediate Muni | M Large vs. Franklin High Yield | M Large vs. The National Tax Free |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |