Correlation Between Smead Value and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Smead Value and Touchstone Large 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 Smead Value and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smead Value Fund and Touchstone Large Cap, you can compare the effects of market volatilities on Smead Value and Touchstone Large 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 Smead Value with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and Touchstone Large.
Diversification Opportunities for Smead Value and Touchstone Large
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smead and Touchstone is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap and Smead Value 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 Smead Value Fund are associated (or correlated) with Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Smead Value i.e., Smead Value and Touchstone Large go up and down completely randomly.
Pair Corralation between Smead Value and Touchstone Large
Assuming the 90 days horizon Smead Value is expected to generate 4.65 times less return on investment than Touchstone Large. In addition to that, Smead Value is 1.32 times more volatile than Touchstone Large Cap. It trades about 0.05 of its total potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.33 per unit of volatility. If you would invest 1,891 in Touchstone Large Cap on November 9, 2024 and sell it today you would earn a total of 85.00 from holding Touchstone Large Cap or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smead Value Fund vs. Touchstone Large Cap
Performance |
| Timeline |
| Smead Value Fund |
| Touchstone Large Cap |
Smead Value and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead Value and Touchstone Large
The main advantage of trading using opposite Smead Value and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, Touchstone Large 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 Large will offset losses from the drop in Touchstone Large's long position.| Smead Value vs. Matthew 25 Fund | Smead Value vs. Baron Real Estate | Smead Value vs. Buffalo Emerging Opportunities | Smead Value vs. Eventide Gilead Fund |
| Touchstone Large vs. Eaton Vance Worldwide | Touchstone Large vs. Eventide Healthcare Life | Touchstone Large vs. Alger Health Sciences | Touchstone Large vs. Alphacentric Lifesci Healthcare |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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