Correlation Between Touchstone Arbitrage and Touchstone Sands
Can any of the company-specific risk be diversified away by investing in both Touchstone Arbitrage and Touchstone Sands 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 Arbitrage and Touchstone Sands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Arbitrage Fund and Touchstone Sands Capital, you can compare the effects of market volatilities on Touchstone Arbitrage and Touchstone Sands 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 Arbitrage with a short position of Touchstone Sands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Arbitrage and Touchstone Sands.
Diversification Opportunities for Touchstone Arbitrage and Touchstone Sands
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Touchstone and Touchstone is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Arbitrage Fund and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital and Touchstone Arbitrage 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 Arbitrage Fund are associated (or correlated) with Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Touchstone Arbitrage i.e., Touchstone Arbitrage and Touchstone Sands go up and down completely randomly.
Pair Corralation between Touchstone Arbitrage and Touchstone Sands
Assuming the 90 days horizon Touchstone Arbitrage Fund is expected to generate 0.28 times more return on investment than Touchstone Sands. However, Touchstone Arbitrage Fund is 3.53 times less risky than Touchstone Sands. It trades about 0.14 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about 0.03 per unit of risk. If you would invest 782.00 in Touchstone Arbitrage Fund on September 4, 2024 and sell it today you would earn a total of 155.00 from holding Touchstone Arbitrage Fund or generate 19.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Arbitrage Fund vs. Touchstone Sands Capital
Performance |
| Timeline |
| Touchstone Arbitrage |
| Touchstone Sands Capital |
Touchstone Arbitrage and Touchstone Sands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Arbitrage and Touchstone Sands
The main advantage of trading using opposite Touchstone Arbitrage and Touchstone Sands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Arbitrage position performs unexpectedly, Touchstone Sands 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 Sands will offset losses from the drop in Touchstone Sands' long position.The idea behind Touchstone Arbitrage Fund and Touchstone Sands Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Touchstone Sands vs. Touchstone Small Cap | Touchstone Sands vs. Mid Cap Growth | Touchstone Sands vs. Mid Cap Growth | Touchstone Sands 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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