Correlation Between Touchstone Sands and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Touchstone Sands and Growth Opportunities 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 Sands and Growth Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Sands Capital and Growth Opportunities Fund, you can compare the effects of market volatilities on Touchstone Sands and Growth Opportunities 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 Sands with a short position of Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Sands and Growth Opportunities.
Diversification Opportunities for Touchstone Sands and Growth Opportunities
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Growth is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Sands Capital and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities and Touchstone Sands 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 Sands Capital are associated (or correlated) with Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Touchstone Sands i.e., Touchstone Sands and Growth Opportunities go up and down completely randomly.
Pair Corralation between Touchstone Sands and Growth Opportunities
Assuming the 90 days horizon Touchstone Sands Capital is expected to generate 1.22 times more return on investment than Growth Opportunities. However, Touchstone Sands is 1.22 times more volatile than Growth Opportunities Fund. It trades about 0.27 of its potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.19 per unit of risk. If you would invest 1,696 in Touchstone Sands Capital on August 25, 2024 and sell it today you would earn a total of 137.00 from holding Touchstone Sands Capital or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Sands Capital vs. Growth Opportunities Fund
Performance |
| Timeline |
| Touchstone Sands Capital |
| Growth Opportunities |
Touchstone Sands and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Sands and Growth Opportunities
The main advantage of trading using opposite Touchstone Sands and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Sands position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Touchstone Sands vs. Kinetics Small Cap | Touchstone Sands vs. Ab Small Cap | Touchstone Sands vs. Fisher Small Cap | Touchstone Sands vs. Ancorathelen Small Mid Cap |
| Growth Opportunities vs. HUMANA INC | Growth Opportunities vs. Aquagold International | Growth Opportunities vs. Barloworld Ltd ADR | Growth Opportunities vs. Morningstar Unconstrained Allocation |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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