Correlation Between Touchstone Small and Mmngx
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Mmngx 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 Mmngx 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 Mmngx, you can compare the effects of market volatilities on Touchstone Small and Mmngx 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 Mmngx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Mmngx.
Diversification Opportunities for Touchstone Small and Mmngx
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Mmngx is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Mmngx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mmngx 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 Mmngx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mmngx has no effect on the direction of Touchstone Small i.e., Touchstone Small and Mmngx go up and down completely randomly.
Pair Corralation between Touchstone Small and Mmngx
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 0.35 times more return on investment than Mmngx. However, Touchstone Small Cap is 2.88 times less risky than Mmngx. It trades about -0.29 of its potential returns per unit of risk. Mmngx is currently generating about -0.3 per unit of risk. If you would invest 4,083 in Touchstone Small Cap on October 8, 2024 and sell it today you would lose (237.00) from holding Touchstone Small Cap or give up 5.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Mmngx
Performance |
| Timeline |
| Touchstone Small Cap |
| Mmngx |
Touchstone Small and Mmngx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Mmngx
The main advantage of trading using opposite Touchstone Small and Mmngx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Mmngx 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 Mmngx will offset losses from the drop in Mmngx's long position.| Touchstone Small vs. Hewitt Money Market | Touchstone Small vs. Pioneer Money Market | Touchstone Small vs. Chestnut Street Exchange | Touchstone Small vs. Cref Money Market |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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