Correlation Between Gmo High and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Gmo High 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 Gmo High and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Touchstone Large Cap, you can compare the effects of market volatilities on Gmo High 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 Gmo High with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Touchstone Large.
Diversification Opportunities for Gmo High and Touchstone Large
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gmo and Touchstone is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield 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 Gmo High 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 Gmo High Yield 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 Gmo High i.e., Gmo High and Touchstone Large go up and down completely randomly.
Pair Corralation between Gmo High and Touchstone Large
Assuming the 90 days horizon Gmo High is expected to generate 1.58 times less return on investment than Touchstone Large. But when comparing it to its historical volatility, Gmo High Yield is 2.96 times less risky than Touchstone Large. It trades about 0.16 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,768 in Touchstone Large Cap on November 3, 2024 and sell it today you would earn a total of 253.00 from holding Touchstone Large Cap or generate 14.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Touchstone Large Cap
Performance |
| Timeline |
| Gmo High Yield |
| Touchstone Large Cap |
Gmo High and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Touchstone Large
The main advantage of trading using opposite Gmo High and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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.| Gmo High vs. Gmo International Equity | Gmo High vs. Artisan Select Equity | Gmo High vs. Small Cap Equity | Gmo High vs. Qs Global Equity |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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