Correlation Between Touchstone Large and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Mainstay Moderate 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 Mainstay Moderate 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 Mainstay Moderate Allocation, you can compare the effects of market volatilities on Touchstone Large and Mainstay Moderate 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 Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Mainstay Moderate.
Diversification Opportunities for Touchstone Large and Mainstay Moderate
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Mainstay is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate 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 Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of Touchstone Large i.e., Touchstone Large and Mainstay Moderate go up and down completely randomly.
Pair Corralation between Touchstone Large and Mainstay Moderate
Assuming the 90 days horizon Touchstone Large Cap is expected to generate 0.46 times more return on investment than Mainstay Moderate. However, Touchstone Large Cap is 2.18 times less risky than Mainstay Moderate. It trades about -0.3 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about -0.33 per unit of risk. If you would invest 1,950 in Touchstone Large Cap on October 15, 2024 and sell it today you would lose (81.00) from holding Touchstone Large Cap or give up 4.15% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Touchstone Large Cap vs. Mainstay Moderate Allocation
Performance |
Timeline |
Touchstone Large Cap |
Mainstay Moderate |
Touchstone Large and Mainstay Moderate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Touchstone Large and Mainstay Moderate
The main advantage of trading using opposite Touchstone Large and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Mainstay Moderate 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 Mainstay Moderate will offset losses from the drop in Mainstay Moderate's long position.Touchstone Large vs. Guggenheim Diversified Income | Touchstone Large vs. Wells Fargo Diversified | Touchstone Large vs. Stone Ridge Diversified | Touchstone Large vs. Small Cap Stock |
Mainstay Moderate vs. Mainstay High Yield | Mainstay Moderate vs. Mainstay Tax Free | Mainstay Moderate vs. Mainstay Income Builder | Mainstay Moderate vs. Mainstay Large Cap |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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