Correlation Between Baron Health and Touchstone Sands
Can any of the company-specific risk be diversified away by investing in both Baron Health and Touchstone Sands 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 Baron Health and Touchstone Sands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Health Care and Touchstone Sands Capital, you can compare the effects of market volatilities on Baron Health and Touchstone Sands 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 Baron Health with a short position of Touchstone Sands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Touchstone Sands.
Diversification Opportunities for Baron Health and Touchstone Sands
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baron and Touchstone is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital and Baron Health 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 Baron Health Care are associated (or correlated) with Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Baron Health i.e., Baron Health and Touchstone Sands go up and down completely randomly.
Pair Corralation between Baron Health and Touchstone Sands
Assuming the 90 days horizon Baron Health is expected to generate 3.88 times less return on investment than Touchstone Sands. But when comparing it to its historical volatility, Baron Health Care is 1.59 times less risky than Touchstone Sands. It trades about 0.04 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,070 in Touchstone Sands Capital on September 12, 2024 and sell it today you would earn a total of 562.00 from holding Touchstone Sands Capital or generate 52.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Baron Health Care vs. Touchstone Sands Capital
Performance |
| Timeline |
| Baron Health Care |
| Touchstone Sands Capital |
Baron Health and Touchstone Sands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Touchstone Sands
The main advantage of trading using opposite Baron Health and Touchstone Sands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Touchstone Sands 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 Sands will offset losses from the drop in Touchstone Sands' long position.| Baron Health vs. Adams Natural Resources | Baron Health vs. Oil Gas Ultrasector | Baron Health vs. Dreyfus Natural Resources | Baron Health vs. Alpsalerian Energy Infrastructure |
| Touchstone Sands vs. Baillie Gifford Health | Touchstone Sands vs. Allianzgi Health Sciences | Touchstone Sands vs. Highland Longshort Healthcare | Touchstone Sands vs. Baron Health Care |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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