Correlation Between Touchstone Large and Midas Special

Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Midas Special 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 Large and Midas Special into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Touchstone Large Cap and Midas Special Fund, you can compare the effects of market volatilities on Touchstone Large and Midas Special 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 Large with a short position of Midas Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Midas Special.

Diversification Opportunities for Touchstone Large and Midas Special

0.08

Correlation Coefficient

Touchstone Large  Midas Special

Significant diversification

The 3 months correlation between Touchstone and Midas is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Midas Special Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midas Special and Touchstone Large 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 Large Cap are associated (or correlated) with Midas Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midas Special has no effect on the direction of Touchstone Large i.e., Touchstone Large and Midas Special go up and down completely randomly.

Pair Corralation between Touchstone Large and Midas Special

Assuming the 90 days horizon Touchstone Large is expected to generate 2.13 times less return on investment than Midas Special. But when comparing it to its historical volatility, Touchstone Large Cap is 1.5 times less risky than Midas Special. It trades about 0.06 of its potential returns per unit of risk. Midas Special Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,255  in Midas Special Fund on October 11, 2024 and sell it today you would earn a total of  1,250  from holding Midas Special Fund or generate 55.43% return on investment over 90 days.

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

Touchstone Large Cap  vs.  Midas Special Fund

Touchstone Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Midas Special

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Midas Special Fund 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, Midas Special 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 Large and Midas Special

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

The idea behind Touchstone Large Cap and Midas Special Fund 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.