Correlation Between Empire State and Touchstone Focused
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and Touchstone Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Touchstone Focused Fund, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of Touchstone Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Touchstone Focused.
Diversification Opportunities for Empire State and Touchstone Focused
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Touchstone is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused and Empire State 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 Empire State Realty 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 Empire State i.e., Empire State and Touchstone Focused go up and down completely randomly.
Pair Corralation between Empire State and Touchstone Focused
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.6 times more return on investment than Touchstone Focused. However, Empire State is 1.6 times more volatile than Touchstone Focused Fund. It trades about 0.15 of its potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.17 per unit of risk. If you would invest 1,082 in Empire State Realty on August 29, 2024 and sell it today you would earn a total of 43.00 from holding Empire State Realty or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Touchstone Focused Fund
Performance |
| Timeline |
| Empire State Realty |
| Touchstone Focused |
Empire State and Touchstone Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Touchstone Focused
The main advantage of trading using opposite Empire State and Touchstone Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Touchstone Focused vs. Tekla Healthcare Opportunities | Touchstone Focused vs. Lord Abbett Health | Touchstone Focused vs. The Gabelli Healthcare | Touchstone Focused vs. Invesco Global Health |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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