Correlation Between Touchstone Sands and Harbor Mid

Can any of the company-specific risk be diversified away by investing in both Touchstone Sands and Harbor 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 Harbor 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 Harbor Mid Cap, you can compare the effects of market volatilities on Touchstone Sands and Harbor 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 Harbor Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Sands and Harbor Mid.

Diversification Opportunities for Touchstone Sands and Harbor Mid

0.96

Correlation Coefficient

Touchstone Sands  Harbor Mid

Almost no diversification

The 3 months correlation between Touchstone and Harbor is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Sands Capital and Harbor Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor 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 Harbor Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Mid Cap has no effect on the direction of Touchstone Sands i.e., Touchstone Sands and Harbor Mid go up and down completely randomly.

Pair Corralation between Touchstone Sands and Harbor Mid

Assuming the 90 days horizon Touchstone Sands Capital is expected to generate 1.12 times more return on investment than Harbor Mid. However, Touchstone Sands is 1.12 times more volatile than Harbor Mid Cap. It trades about 0.13 of its potential returns per unit of risk. Harbor Mid Cap is currently generating about 0.08 per unit of risk. If you would invest  1,471  in Touchstone Sands Capital on October 8, 2024 and sell it today you would earn a total of  158.00  from holding Touchstone Sands Capital or generate 10.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Touchstone Sands Capital  vs.  Harbor Mid Cap

Touchstone Sands Capital

Risk-Adjusted Performance

10 of 100

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.

Harbor Mid Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Mid Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Harbor Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Touchstone Sands and Harbor Mid

The main advantage of trading using opposite Touchstone Sands and Harbor Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Sands position performs unexpectedly, Harbor 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 Harbor Mid will offset losses from the drop in Harbor Mid's long position.

The idea behind Touchstone Sands Capital and Harbor 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.