Correlation Between Gmo Small and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Gmo Small 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 Gmo Small and Touchstone Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Small Cap and Touchstone Small Cap, you can compare the effects of market volatilities on Gmo Small 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 Gmo Small with a short position of Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Small and Touchstone Small.
Diversification Opportunities for Gmo Small and Touchstone Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and Touchstone is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Small Cap 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 Gmo Small 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 Small Cap 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 Gmo Small i.e., Gmo Small and Touchstone Small go up and down completely randomly.
Pair Corralation between Gmo Small and Touchstone Small
Assuming the 90 days horizon Gmo Small Cap is expected to under-perform the Touchstone Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gmo Small Cap is 1.08 times less risky than Touchstone Small. The mutual fund trades about -0.38 of its potential returns per unit of risk. The Touchstone Small Cap is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 3,950 in Touchstone Small Cap on November 27, 2024 and sell it today you would lose (132.00) from holding Touchstone Small Cap or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Small Cap vs. Touchstone Small Cap
Performance |
| Timeline |
| Gmo Small Cap |
| Touchstone Small Cap |
Gmo Small and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Small and Touchstone Small
The main advantage of trading using opposite Gmo Small and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Small 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.| Gmo Small vs. Valic Company I | Gmo Small vs. Inverse Mid Cap Strategy | Gmo Small vs. Blackrock Smid Cap Growth | Gmo Small vs. T Rowe Price |
| Touchstone Small vs. Voya Retirement Growth | Touchstone Small vs. Voya Target Retirement | Touchstone Small vs. Dimensional Retirement Income | Touchstone Small vs. Tiaa Cref Lifestyle Moderate |
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.
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