Correlation Between James Small and Touchstone Sands
Can any of the company-specific risk be diversified away by investing in both James Small 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 James Small and Touchstone Sands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James Small Cap and Touchstone Sands Capital, you can compare the effects of market volatilities on James Small 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 James Small with a short position of Touchstone Sands. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Small and Touchstone Sands.
Diversification Opportunities for James Small and Touchstone Sands
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between James and Touchstone is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding James Small Cap 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 James 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 James Small Cap 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 James Small i.e., James Small and Touchstone Sands go up and down completely randomly.
Pair Corralation between James Small and Touchstone Sands
Assuming the 90 days horizon James Small Cap is expected to under-perform the Touchstone Sands. But the mutual fund apears to be less risky and, when comparing its historical volatility, James Small Cap is 1.5 times less risky than Touchstone Sands. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Touchstone Sands Capital is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,657 in Touchstone Sands Capital on October 11, 2024 and sell it today you would lose (42.00) from holding Touchstone Sands Capital or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
James Small Cap vs. Touchstone Sands Capital
Performance |
| Timeline |
| James Small Cap |
| Touchstone Sands Capital |
James Small and Touchstone Sands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James Small and Touchstone Sands
The main advantage of trading using opposite James Small and Touchstone Sands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Small 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.| James Small vs. James Balanced Golden | James Small vs. Sterling Capital Stratton | James Small vs. Perritt Microcap Opportunities | James Small vs. Royce Smaller Companies Growth |
| Touchstone Sands vs. Large Cap Fund | Touchstone Sands vs. Nicholas Ii Inc | Touchstone Sands vs. Mid Cap Value | Touchstone Sands vs. Tcw Relative Value |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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