Correlation Between Touchstone Small and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Mid Cap 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 Mid Cap 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 Mid Cap Growth, you can compare the effects of market volatilities on Touchstone Small and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Mid Cap.
Diversification Opportunities for Touchstone Small and Mid Cap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Mid is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Touchstone Small i.e., Touchstone Small and Mid Cap go up and down completely randomly.
Pair Corralation between Touchstone Small and Mid Cap
Assuming the 90 days horizon Touchstone Small is expected to generate 1.17 times less return on investment than Mid Cap. In addition to that, Touchstone Small is 1.08 times more volatile than Mid Cap Growth. It trades about 0.11 of its total potential returns per unit of risk. Mid Cap Growth is currently generating about 0.14 per unit of volatility. If you would invest 3,726 in Mid Cap Growth on August 29, 2024 and sell it today you would earn a total of 784.00 from holding Mid Cap Growth or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Mid Cap Growth
Performance |
| Timeline |
| Touchstone Small Cap |
| Mid Cap Growth |
Touchstone Small and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Mid Cap
The main advantage of trading using opposite Touchstone Small and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap's long position.| Touchstone Small vs. T Rowe Price | Touchstone Small vs. Kinetics Global Fund | Touchstone Small vs. Power Global Tactical | Touchstone Small vs. Dreyfusstandish Global Fixed |
| Mid Cap vs. Touchstone Mid Cap | Mid Cap vs. Federated Mdt Small | Mid Cap vs. Harding Loevner International | Mid Cap vs. Sterling Capital Equity |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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