Correlation Between Inflation Protected and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Inflation Protected 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 Inflation Protected and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Touchstone Large Cap, you can compare the effects of market volatilities on Inflation Protected 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 Inflation Protected with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Protected and Touchstone Large.
Diversification Opportunities for Inflation Protected and Touchstone Large
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inflation and Touchstone is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund 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 Inflation Protected 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 Inflation Protected Bond Fund 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 Inflation Protected i.e., Inflation Protected and Touchstone Large go up and down completely randomly.
Pair Corralation between Inflation Protected and Touchstone Large
Assuming the 90 days horizon Inflation Protected is expected to generate 2.25 times less return on investment than Touchstone Large. But when comparing it to its historical volatility, Inflation Protected Bond Fund is 1.41 times less risky than Touchstone Large. It trades about 0.11 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,909 in Touchstone Large Cap on October 24, 2024 and sell it today you would earn a total of 38.00 from holding Touchstone Large Cap or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Touchstone Large Cap
Performance |
| Timeline |
| Inflation Protected |
| Touchstone Large Cap |
Inflation Protected and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Protected and Touchstone Large
The main advantage of trading using opposite Inflation Protected and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Protected 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.The idea behind Inflation Protected Bond Fund and Touchstone Large Cap 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 Large vs. Transamerica Large Cap | Touchstone Large vs. M Large Cap | Touchstone Large vs. Fisher Large Cap | Touchstone Large vs. Fidelity Large Cap |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |