Correlation Between Prudential High and Touchstone Mid
Can any of the company-specific risk be diversified away by investing in both Prudential High and Touchstone 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 Prudential High and Touchstone Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential High Yield and Touchstone Mid Cap, you can compare the effects of market volatilities on Prudential High and Touchstone 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 Prudential High with a short position of Touchstone Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Touchstone Mid.
Diversification Opportunities for Prudential High and Touchstone Mid
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prudential and Touchstone is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and Touchstone Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Mid Cap and Prudential High 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 Prudential High Yield are associated (or correlated) with Touchstone Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Mid Cap has no effect on the direction of Prudential High i.e., Prudential High and Touchstone Mid go up and down completely randomly.
Pair Corralation between Prudential High and Touchstone Mid
Assuming the 90 days horizon Prudential High Yield is expected to generate 0.22 times more return on investment than Touchstone Mid. However, Prudential High Yield is 4.58 times less risky than Touchstone Mid. It trades about 0.18 of its potential returns per unit of risk. Touchstone Mid Cap is currently generating about 0.01 per unit of risk. If you would invest 476.00 in Prudential High Yield on July 19, 2025 and sell it today you would earn a total of 11.00 from holding Prudential High Yield or generate 2.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Prudential High Yield vs. Touchstone Mid Cap
Performance |
Timeline |
Prudential High Yield |
Touchstone Mid Cap |
Prudential High and Touchstone Mid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prudential High and Touchstone Mid
The main advantage of trading using opposite Prudential High and Touchstone Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High position performs unexpectedly, Touchstone 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 Touchstone Mid will offset losses from the drop in Touchstone Mid's long position.The idea behind Prudential High Yield and Touchstone 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.
Touchstone Mid vs. Touchstone Small Cap | Touchstone Mid vs. Touchstone Sands Capital | Touchstone Mid vs. Mid Cap Growth | Touchstone Mid vs. Mid Cap Growth |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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