Correlation Between American Funds and Touchstone Ultra
Can any of the company-specific risk be diversified away by investing in both American Funds and Touchstone Ultra 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 American Funds and Touchstone Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Touchstone Ultra Short, you can compare the effects of market volatilities on American Funds and Touchstone Ultra 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 American Funds with a short position of Touchstone Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Touchstone Ultra.
Diversification Opportunities for American Funds and Touchstone Ultra
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Touchstone is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Touchstone Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Ultra Short and American Funds 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 American Funds Retirement are associated (or correlated) with Touchstone Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Ultra Short has no effect on the direction of American Funds i.e., American Funds and Touchstone Ultra go up and down completely randomly.
Pair Corralation between American Funds and Touchstone Ultra
Assuming the 90 days horizon American Funds Retirement is expected to generate 3.98 times more return on investment than Touchstone Ultra. However, American Funds is 3.98 times more volatile than Touchstone Ultra Short. It trades about 0.15 of its potential returns per unit of risk. Touchstone Ultra Short is currently generating about 0.26 per unit of risk. If you would invest 1,116 in American Funds Retirement on September 4, 2024 and sell it today you would earn a total of 175.00 from holding American Funds Retirement or generate 15.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
American Funds Retirement vs. Touchstone Ultra Short
Performance |
| Timeline |
| American Funds Retirement |
| Touchstone Ultra Short |
American Funds and Touchstone Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Touchstone Ultra
The main advantage of trading using opposite American Funds and Touchstone Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Touchstone Ultra 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 Ultra will offset losses from the drop in Touchstone Ultra's long position.| American Funds vs. Guggenheim Risk Managed | American Funds vs. Deutsche Real Estate | American Funds vs. Pender Real Estate | American Funds vs. Virtus Real Estate |
| Touchstone Ultra vs. Real Estate Ultrasector | Touchstone Ultra vs. Commonwealth Real Estate | Touchstone Ultra vs. Columbia Real Estate | Touchstone Ultra vs. Sa Real Estate |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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