Correlation Between Aggressive Balanced and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Aggressive Balanced and Touchstone Small 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 Aggressive Balanced and Touchstone Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Balanced Allocation and Touchstone Small Cap, you can compare the effects of market volatilities on Aggressive Balanced and Touchstone Small 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 Aggressive Balanced with a short position of Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Balanced and Touchstone Small.
Diversification Opportunities for Aggressive Balanced and Touchstone Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aggressive and Touchstone is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Balanced Allocation and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Aggressive Balanced 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 Aggressive Balanced Allocation are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Aggressive Balanced i.e., Aggressive Balanced and Touchstone Small go up and down completely randomly.
Pair Corralation between Aggressive Balanced and Touchstone Small
Assuming the 90 days horizon Aggressive Balanced Allocation is expected to generate 0.79 times more return on investment than Touchstone Small. However, Aggressive Balanced Allocation is 1.26 times less risky than Touchstone Small. It trades about -0.23 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about -0.3 per unit of risk. If you would invest 1,232 in Aggressive Balanced Allocation on October 11, 2024 and sell it today you would lose (47.00) from holding Aggressive Balanced Allocation or give up 3.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Balanced Allocation vs. Touchstone Small Cap
Performance |
| Timeline |
| Aggressive Balanced |
| Touchstone Small Cap |
Aggressive Balanced and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Balanced and Touchstone Small
The main advantage of trading using opposite Aggressive Balanced and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Balanced position performs unexpectedly, Touchstone Small 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 Small will offset losses from the drop in Touchstone Small's long position.| Aggressive Balanced vs. Saat Tax Managed Aggressive | Aggressive Balanced vs. Fidelity Focused High | Aggressive Balanced vs. Intal High Relative | Aggressive Balanced vs. Catalystsmh High Income |
| Touchstone Small vs. Needham Aggressive Growth | Touchstone Small vs. Americafirst Monthly Risk On | Touchstone Small vs. Siit High Yield | Touchstone Small vs. Aggressive Balanced Allocation |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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