Correlation Between Microsoft and Touchstone Premium
Can any of the company-specific risk be diversified away by investing in both Microsoft and Touchstone Premium 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 Microsoft and Touchstone Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Touchstone Premium Yield, you can compare the effects of market volatilities on Microsoft and Touchstone Premium 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 Microsoft with a short position of Touchstone Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Touchstone Premium.
Diversification Opportunities for Microsoft and Touchstone Premium
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Touchstone is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Touchstone Premium Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Premium Yield and Microsoft 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 Microsoft are associated (or correlated) with Touchstone Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Premium Yield has no effect on the direction of Microsoft i.e., Microsoft and Touchstone Premium go up and down completely randomly.
Pair Corralation between Microsoft and Touchstone Premium
Given the investment horizon of 90 days Microsoft is expected to generate 1.22 times more return on investment than Touchstone Premium. However, Microsoft is 1.22 times more volatile than Touchstone Premium Yield. It trades about 0.05 of its potential returns per unit of risk. Touchstone Premium Yield is currently generating about -0.09 per unit of risk. If you would invest 49,513 in Microsoft on May 28, 2025 and sell it today you would earn a total of 913.00 from holding Microsoft or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Microsoft vs. Touchstone Premium Yield
Performance |
| Timeline |
| Microsoft |
| Touchstone Premium Yield |
Microsoft and Touchstone Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Touchstone Premium
The main advantage of trading using opposite Microsoft and Touchstone Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Touchstone Premium 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 Premium will offset losses from the drop in Touchstone Premium's long position.| Microsoft vs. Palantir Technologies Class | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Oracle | Microsoft vs. CoreWeave, Class A |
| Touchstone Premium vs. John Hancock Financial | Touchstone Premium vs. Angel Oak Financial | Touchstone Premium vs. Davis Financial Fund | Touchstone Premium vs. Putnam Global Financials |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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