Correlation Between First Investors and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both First Investors and Touchstone Large 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 First Investors and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Investors Opportunity and Touchstone Large Cap, you can compare the effects of market volatilities on First Investors and Touchstone Large 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 First Investors with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Investors and Touchstone Large.
Diversification Opportunities for First Investors and Touchstone Large
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Touchstone is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Opportunity and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap and First Investors 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 First Investors Opportunity are associated (or correlated) with Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of First Investors i.e., First Investors and Touchstone Large go up and down completely randomly.
Pair Corralation between First Investors and Touchstone Large
Assuming the 90 days horizon First Investors Opportunity is expected to generate 1.3 times more return on investment than Touchstone Large. However, First Investors is 1.3 times more volatile than Touchstone Large Cap. It trades about 0.31 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.17 per unit of risk. If you would invest 3,435 in First Investors Opportunity on October 23, 2024 and sell it today you would earn a total of 159.00 from holding First Investors Opportunity or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
First Investors Opportunity vs. Touchstone Large Cap
Performance |
| Timeline |
| First Investors Oppo |
| Touchstone Large Cap |
First Investors and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Investors and Touchstone Large
The main advantage of trading using opposite First Investors and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Investors position performs unexpectedly, Touchstone Large 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 Large will offset losses from the drop in Touchstone Large's long position.| First Investors vs. Rbc Global Equity | First Investors vs. Dreyfusstandish Global Fixed | First Investors vs. Morningstar Global Income | First Investors vs. Ab Global Bond |
| Touchstone Large vs. Virtus High Yield | Touchstone Large vs. Ab High Income | Touchstone Large vs. Ab High Income | Touchstone Large vs. Fidelity Focused High |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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