Correlation Between GM and Touchstone Focused
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Touchstone Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Touchstone Focused Fund, you can compare the effects of market volatilities on GM 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 GM with a short position of Touchstone Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Touchstone Focused.
Diversification Opportunities for GM and Touchstone Focused
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and TOUCHSTONE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused and GM 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 General Motors 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 GM i.e., GM and Touchstone Focused go up and down completely randomly.
Pair Corralation between GM and Touchstone Focused
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Touchstone Focused. In addition to that, GM is 3.72 times more volatile than Touchstone Focused Fund. It trades about -0.05 of its total potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.28 per unit of volatility. If you would invest 7,289 in Touchstone Focused Fund on November 3, 2024 and sell it today you would earn a total of 331.00 from holding Touchstone Focused Fund or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Touchstone Focused Fund
Performance |
| Timeline |
| General Motors |
| Touchstone Focused |
GM and Touchstone Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Touchstone Focused
The main advantage of trading using opposite GM and Touchstone Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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. Lgm Risk Managed | Touchstone Focused vs. Rbc Bluebay Global | Touchstone Focused vs. Ironclad Managed Risk | Touchstone Focused vs. Pace High Yield |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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