Correlation Between Federated Ultrashort and Touchstone Focused
Can any of the company-specific risk be diversified away by investing in both Federated Ultrashort 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 Federated Ultrashort and Touchstone Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Ultrashort Bond and Touchstone Focused Fund, you can compare the effects of market volatilities on Federated Ultrashort 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 Federated Ultrashort with a short position of Touchstone Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ultrashort and Touchstone Focused.
Diversification Opportunities for Federated Ultrashort and Touchstone Focused
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Touchstone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ultrashort Bond and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused and Federated Ultrashort 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 Ultrashort Bond 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 Federated Ultrashort i.e., Federated Ultrashort and Touchstone Focused go up and down completely randomly.
Pair Corralation between Federated Ultrashort and Touchstone Focused
Assuming the 90 days horizon Federated Ultrashort is expected to generate 2.72 times less return on investment than Touchstone Focused. But when comparing it to its historical volatility, Federated Ultrashort Bond is 6.96 times less risky than Touchstone Focused. It trades about 0.24 of its potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,172 in Touchstone Focused Fund on September 12, 2024 and sell it today you would earn a total of 1,548 from holding Touchstone Focused Fund or generate 25.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ultrashort Bond vs. Touchstone Focused Fund
Performance |
| Timeline |
| Federated Ultrashort Bond |
| Touchstone Focused |
Federated Ultrashort and Touchstone Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ultrashort and Touchstone Focused
The main advantage of trading using opposite Federated Ultrashort and Touchstone Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ultrashort 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.The idea behind Federated Ultrashort Bond and Touchstone Focused Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Touchstone Focused vs. Rationalpier 88 Convertible | Touchstone Focused vs. Allianzgi Convertible Income | Touchstone Focused vs. Virtus Convertible | Touchstone Focused vs. Fidelity Sai Convertible |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |