Correlation Between Touchstone Small and Federated Max
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Federated Max 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 Small and Federated Max into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Small Cap and Federated Max Cap Index, you can compare the effects of market volatilities on Touchstone Small and Federated Max 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 Small with a short position of Federated Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Federated Max.
Diversification Opportunities for Touchstone Small and Federated Max
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Federated is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Federated Max Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Max Cap and Touchstone Small 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 Small Cap are associated (or correlated) with Federated Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Max Cap has no effect on the direction of Touchstone Small i.e., Touchstone Small and Federated Max go up and down completely randomly.
Pair Corralation between Touchstone Small and Federated Max
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 2.06 times more return on investment than Federated Max. However, Touchstone Small is 2.06 times more volatile than Federated Max Cap Index. It trades about 0.3 of its potential returns per unit of risk. Federated Max Cap Index is currently generating about 0.32 per unit of risk. If you would invest 3,810 in Touchstone Small Cap on September 1, 2024 and sell it today you would earn a total of 367.00 from holding Touchstone Small Cap or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Touchstone Small Cap vs. Federated Max Cap Index
Performance |
| Timeline |
| Touchstone Small Cap |
| Federated Max Cap |
Touchstone Small and Federated Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Federated Max
The main advantage of trading using opposite Touchstone Small and Federated Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Federated Max 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 Federated Max will offset losses from the drop in Federated Max's long position.| Touchstone Small vs. Cutler Equity | Touchstone Small vs. Scharf Fund Retail | Touchstone Small vs. Huber Capital Equity | Touchstone Small vs. Icon Equity Income |
| Federated Max vs. Federated Emerging Market | Federated Max vs. Federated Mdt All | Federated Max vs. Federated Mdt Balanced | Federated Max vs. Federated Global Allocation |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |