Correlation Between GM and Touchstone Dividend
Can any of the company-specific risk be diversified away by investing in both GM and Touchstone Dividend 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 Dividend 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 Dividend Equity, you can compare the effects of market volatilities on GM and Touchstone Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Touchstone Dividend.
Diversification Opportunities for GM and Touchstone Dividend
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Touchstone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Touchstone Dividend Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Dividend 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Dividend has no effect on the direction of GM i.e., GM and Touchstone Dividend go up and down completely randomly.
Pair Corralation between GM and Touchstone Dividend
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.02 times more return on investment than Touchstone Dividend. However, GM is 3.02 times more volatile than Touchstone Dividend Equity. It trades about 0.08 of its potential returns per unit of risk. Touchstone Dividend Equity is currently generating about 0.1 per unit of risk. If you would invest 4,411 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,148 from holding General Motors or generate 26.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Touchstone Dividend Equity
Performance |
| Timeline |
| General Motors |
| Touchstone Dividend |
GM and Touchstone Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Touchstone Dividend
The main advantage of trading using opposite GM and Touchstone Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Touchstone Dividend 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 Dividend will offset losses from the drop in Touchstone Dividend's long position.The idea behind General Motors and Touchstone Dividend Equity 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 Dividend vs. Vanguard Value Index | Touchstone Dividend vs. Dodge Cox Stock | Touchstone Dividend vs. American Funds American | Touchstone Dividend vs. American Funds American |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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