Correlation Between Touchstone Small and Marsico Global

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

Diversification Opportunities for Touchstone Small and Marsico Global

0.63

Correlation Coefficient

Touchstone Small  Marsico Global

Poor diversification

The 3 months correlation between Touchstone and Marsico is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Marsico Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Global 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 Marsico Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Global has no effect on the direction of Touchstone Small i.e., Touchstone Small and Marsico Global go up and down completely randomly.

Pair Corralation between Touchstone Small and Marsico Global

Assuming the 90 days horizon Touchstone Small is expected to generate 1.54 times less return on investment than Marsico Global. But when comparing it to its historical volatility, Touchstone Small Cap is 1.05 times less risky than Marsico Global. It trades about 0.08 of its potential returns per unit of risk. Marsico Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,830  in Marsico Global on October 8, 2024 and sell it today you would earn a total of  806.00  from holding Marsico Global or generate 44.04% return on investment over 90 days.

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

Touchstone Small Cap  vs.  Marsico Global

Touchstone Small Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Small Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Touchstone Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Marsico Global

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Global are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Marsico Global 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 Small and Marsico Global

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

The idea behind Touchstone Small Cap and Marsico Global 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.