Correlation Between Federated and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Federated and Touchstone Small 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 Federated and Touchstone Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated U S and Touchstone Small Cap, you can compare the effects of market volatilities on Federated and Touchstone Small 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 Federated with a short position of Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated and Touchstone Small.
Diversification Opportunities for Federated and Touchstone Small
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Touchstone is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Federated U S and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Federated 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 Federated U S are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Federated i.e., Federated and Touchstone Small go up and down completely randomly.
Pair Corralation between Federated and Touchstone Small
Assuming the 90 days horizon Federated is expected to generate 4.17 times less return on investment than Touchstone Small. But when comparing it to its historical volatility, Federated U S is 7.35 times less risky than Touchstone Small. It trades about 0.12 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,194 in Touchstone Small Cap on September 12, 2024 and sell it today you would earn a total of 872.00 from holding Touchstone Small Cap or generate 27.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated U S vs. Touchstone Small Cap
Performance |
| Timeline |
| Federated U S |
| Touchstone Small Cap |
Federated and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated and Touchstone Small
The main advantage of trading using opposite Federated and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated position performs unexpectedly, Touchstone Small 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 Small will offset losses from the drop in Touchstone Small's long position.| Federated vs. SCOR PK | Federated vs. Morningstar Unconstrained Allocation | Federated vs. Via Renewables | Federated vs. Bondbloxx ETF Trust |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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