Correlation Between Touchstone Premium and Meridian Equity
Can any of the company-specific risk be diversified away by investing in both Touchstone Premium and Meridian Equity 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 Premium and Meridian Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Premium Yield and Meridian Equity Income, you can compare the effects of market volatilities on Touchstone Premium and Meridian Equity 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 Premium with a short position of Meridian Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Premium and Meridian Equity.
Diversification Opportunities for Touchstone Premium and Meridian Equity
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Touchstone and Meridian is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and Meridian Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Equity Income and Touchstone Premium 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 Premium Yield are associated (or correlated) with Meridian Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Equity Income has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and Meridian Equity go up and down completely randomly.
Pair Corralation between Touchstone Premium and Meridian Equity
Assuming the 90 days horizon Touchstone Premium is expected to generate 1.18 times less return on investment than Meridian Equity. In addition to that, Touchstone Premium is 1.67 times more volatile than Meridian Equity Income. It trades about 0.06 of its total potential returns per unit of risk. Meridian Equity Income is currently generating about 0.12 per unit of volatility. If you would invest 1,301 in Meridian Equity Income on September 1, 2024 and sell it today you would earn a total of 124.00 from holding Meridian Equity Income or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Touchstone Premium Yield vs. Meridian Equity Income
Performance |
| Timeline |
| Touchstone Premium Yield |
| Meridian Equity Income |
Touchstone Premium and Meridian Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Premium and Meridian Equity
The main advantage of trading using opposite Touchstone Premium and Meridian Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Premium position performs unexpectedly, Meridian Equity 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 Meridian Equity will offset losses from the drop in Meridian Equity's long position.| Touchstone Premium vs. Ab Small Cap | Touchstone Premium vs. Touchstone Small Cap | Touchstone Premium vs. Jpmorgan Small Cap | Touchstone Premium vs. Artisan Small Cap |
| Meridian Equity vs. Meridian Equity Income | Meridian Equity vs. Meridian Growth Fund | Meridian Equity vs. Meridian Growth Fund | Meridian Equity vs. Meridian Equity Income |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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