Correlation Between Touchstone Sands and American Beacon
Can any of the company-specific risk be diversified away by investing in both Touchstone Sands and American Beacon 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 Touchstone Sands and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Sands Capital and American Beacon Large, you can compare the effects of market volatilities on Touchstone Sands and American Beacon 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 Touchstone Sands with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Sands and American Beacon.
Diversification Opportunities for Touchstone Sands and American Beacon
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and AMERICAN is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Sands Capital and American Beacon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Large and Touchstone Sands 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 Touchstone Sands Capital are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Large has no effect on the direction of Touchstone Sands i.e., Touchstone Sands and American Beacon go up and down completely randomly.
Pair Corralation between Touchstone Sands and American Beacon
Assuming the 90 days horizon Touchstone Sands Capital is expected to generate 1.6 times more return on investment than American Beacon. However, Touchstone Sands is 1.6 times more volatile than American Beacon Large. It trades about 0.27 of its potential returns per unit of risk. American Beacon Large is currently generating about 0.22 per unit of risk. If you would invest 1,504 in Touchstone Sands Capital on August 28, 2024 and sell it today you would earn a total of 122.00 from holding Touchstone Sands Capital or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Sands Capital vs. American Beacon Large
Performance |
| Timeline |
| Touchstone Sands Capital |
| American Beacon Large |
Touchstone Sands and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Sands and American Beacon
The main advantage of trading using opposite Touchstone Sands and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Sands position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Touchstone Sands vs. Large Cap Fund | Touchstone Sands vs. Nicholas Ii Inc | Touchstone Sands vs. Mid Cap Value | Touchstone Sands vs. Tcw Relative Value |
| American Beacon vs. Northern Small Cap | American Beacon vs. Ssga International Stock | American Beacon vs. American Beacon International | American Beacon vs. Perkins Mid 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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