Correlation Between Global Gold and Touchstone International
Can any of the company-specific risk be diversified away by investing in both Global Gold and Touchstone International 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 Global Gold and Touchstone International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Touchstone International Equity, you can compare the effects of market volatilities on Global Gold and Touchstone International 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 Global Gold with a short position of Touchstone International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Touchstone International.
Diversification Opportunities for Global Gold and Touchstone International
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Touchstone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Touchstone International Equit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone International and Global Gold 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 Global Gold Fund are associated (or correlated) with Touchstone International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone International has no effect on the direction of Global Gold i.e., Global Gold and Touchstone International go up and down completely randomly.
Pair Corralation between Global Gold and Touchstone International
Assuming the 90 days horizon Global Gold Fund is expected to generate 1.88 times more return on investment than Touchstone International. However, Global Gold is 1.88 times more volatile than Touchstone International Equity. It trades about 0.42 of its potential returns per unit of risk. Touchstone International Equity is currently generating about 0.23 per unit of risk. If you would invest 1,180 in Global Gold Fund on October 28, 2024 and sell it today you would earn a total of 131.00 from holding Global Gold Fund or generate 11.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Touchstone International Equit
Performance |
| Timeline |
| Global Gold Fund |
| Touchstone International |
Global Gold and Touchstone International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Touchstone International
The main advantage of trading using opposite Global Gold and Touchstone International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Touchstone International 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 International will offset losses from the drop in Touchstone International's long position.| Global Gold vs. Blackrock Financial Institutions | Global Gold vs. T Rowe Price | Global Gold vs. Financials Ultrasector Profund | Global Gold vs. Financials Ultrasector Profund |
| Touchstone International vs. Transamerica Large Cap | Touchstone International vs. Vest Large Cap | Touchstone International vs. Americafirst Large Cap | Touchstone International vs. Fidelity 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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