Correlation Between Pace International and Touchstone Focused
Can any of the company-specific risk be diversified away by investing in both Pace International and Touchstone Focused 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 Pace International and Touchstone Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace International Emerging and Touchstone Focused Fund, you can compare the effects of market volatilities on Pace International and Touchstone Focused 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 Pace International with a short position of Touchstone Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and Touchstone Focused.
Diversification Opportunities for Pace International and Touchstone Focused
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PACE and Touchstone is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused and Pace International 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 Pace International Emerging are associated (or correlated) with Touchstone Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Focused has no effect on the direction of Pace International i.e., Pace International and Touchstone Focused go up and down completely randomly.
Pair Corralation between Pace International and Touchstone Focused
Assuming the 90 days horizon Pace International is expected to generate 1.97 times less return on investment than Touchstone Focused. In addition to that, Pace International is 1.22 times more volatile than Touchstone Focused Fund. It trades about 0.06 of its total potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.13 per unit of volatility. If you would invest 5,778 in Touchstone Focused Fund on September 4, 2024 and sell it today you would earn a total of 1,784 from holding Touchstone Focused Fund or generate 30.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace International Emerging vs. Touchstone Focused Fund
Performance |
| Timeline |
| Pace International |
| Touchstone Focused |
Pace International and Touchstone Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace International and Touchstone Focused
The main advantage of trading using opposite Pace International and Touchstone Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International position performs unexpectedly, Touchstone Focused 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 Focused will offset losses from the drop in Touchstone Focused's long position.| Pace International vs. Inflation Protected Bond Fund | Pace International vs. Oklahoma College Savings | Pace International vs. Arrow Managed Futures | Pace International vs. Guidepath Managed Futures |
| Touchstone Focused vs. Touchstone Small Cap | Touchstone Focused vs. Touchstone Sands Capital | Touchstone Focused vs. Mid Cap Growth | Touchstone Focused 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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