Correlation Between Federated Emerging and Touchstone Sands
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Touchstone Sands 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 Emerging and Touchstone Sands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Emerging Market and Touchstone Sands Capital, you can compare the effects of market volatilities on Federated Emerging and Touchstone Sands 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 Emerging with a short position of Touchstone Sands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Touchstone Sands.
Diversification Opportunities for Federated Emerging and Touchstone Sands
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Touchstone is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital and Federated Emerging 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 Emerging Market are associated (or correlated) with Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Federated Emerging i.e., Federated Emerging and Touchstone Sands go up and down completely randomly.
Pair Corralation between Federated Emerging and Touchstone Sands
Assuming the 90 days horizon Federated Emerging Market is expected to generate 0.43 times more return on investment than Touchstone Sands. However, Federated Emerging Market is 2.35 times less risky than Touchstone Sands. It trades about 0.13 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about -0.18 per unit of risk. If you would invest 785.00 in Federated Emerging Market on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Federated Emerging Market or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Federated Emerging Market vs. Touchstone Sands Capital
Performance |
| Timeline |
| Federated Emerging Market |
| Touchstone Sands Capital |
Federated Emerging and Touchstone Sands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Touchstone Sands
The main advantage of trading using opposite Federated Emerging and Touchstone Sands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Touchstone Sands 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 Sands will offset losses from the drop in Touchstone Sands' long position.| Federated Emerging vs. Fidelity Advisor Financial | Federated Emerging vs. 1919 Financial Services | Federated Emerging vs. Mesirow Financial Small | Federated Emerging vs. John Hancock Financial |
| Touchstone Sands vs. Touchstone Small Cap | Touchstone Sands vs. Mid Cap Growth | Touchstone Sands vs. Mid Cap Growth | Touchstone Sands vs. Mid Cap Growth |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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