Correlation Between Touchstone Sands and Madison Mid

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Can any of the company-specific risk be diversified away by investing in both Touchstone Sands and Madison Mid 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 Sands and Madison Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Sands Capital and Madison Mid Cap, you can compare the effects of market volatilities on Touchstone Sands and Madison Mid 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 Sands with a short position of Madison Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Sands and Madison Mid.

Diversification Opportunities for Touchstone Sands and Madison Mid

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Touchstone and Madison is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Sands Capital and Madison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Mid Cap and Touchstone Sands 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 Sands Capital are associated (or correlated) with Madison Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Mid Cap has no effect on the direction of Touchstone Sands i.e., Touchstone Sands and Madison Mid go up and down completely randomly.

Pair Corralation between Touchstone Sands and Madison Mid

Assuming the 90 days horizon Touchstone Sands Capital is expected to generate 0.89 times more return on investment than Madison Mid. However, Touchstone Sands Capital is 1.13 times less risky than Madison Mid. It trades about -0.1 of its potential returns per unit of risk. Madison Mid Cap is currently generating about -0.33 per unit of risk. If you would invest  1,678  in Touchstone Sands Capital on October 8, 2024 and sell it today you would lose (49.00) from holding Touchstone Sands Capital or give up 2.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Touchstone Sands Capital  vs.  Madison Mid Cap

 Performance 
       Timeline  
Touchstone Sands Capital 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Sands Capital are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Touchstone Sands may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Madison Mid Cap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Madison Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Madison Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Sands and Madison Mid Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Touchstone Sands and Madison Mid

The main advantage of trading using opposite Touchstone Sands and Madison Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Sands position performs unexpectedly, Madison Mid 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 Madison Mid will offset losses from the drop in Madison Mid's long position.
The idea behind Touchstone Sands Capital and Madison Mid 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.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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