Correlation Between Dow Jones and Touchstone Focused
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Touchstone Focused 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 Dow Jones and Touchstone Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Touchstone Focused Fund, you can compare the effects of market volatilities on Dow Jones and Touchstone Focused 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 Dow Jones with a short position of Touchstone Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Touchstone Focused.
Diversification Opportunities for Dow Jones and Touchstone Focused
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and TOUCHSTONE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Touchstone Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Focused has no effect on the direction of Dow Jones i.e., Dow Jones and Touchstone Focused go up and down completely randomly.
Pair Corralation between Dow Jones and Touchstone Focused
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.9 times more return on investment than Touchstone Focused. However, Dow Jones Industrial is 1.11 times less risky than Touchstone Focused. It trades about 0.17 of its potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.08 per unit of risk. If you would invest 4,290,695 in Dow Jones Industrial on October 23, 2024 and sell it today you would earn a total of 111,886 from holding Dow Jones Industrial or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Touchstone Focused Fund
Performance |
| Timeline |
Dow Jones and Touchstone Focused Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Touchstone Focused Fund
Pair trading matchups for Touchstone Focused
Pair Trading with Dow Jones and Touchstone Focused
The main advantage of trading using opposite Dow Jones and Touchstone Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Touchstone Focused 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 Focused will offset losses from the drop in Touchstone Focused's long position.| Dow Jones vs. Transocean | Dow Jones vs. Noble plc | Dow Jones vs. Evolution Gaming Group | Dow Jones vs. Addus HomeCare |
| Touchstone Focused vs. Gmo Global Equity | Touchstone Focused vs. Kinetics Global Fund | Touchstone Focused vs. Morningstar Global Income | Touchstone Focused vs. Qs Global Equity |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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