Correlation Between Touchstone Large and American Funds
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and American Funds 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 Large and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Large Cap and American Funds Strategic, you can compare the effects of market volatilities on Touchstone Large and American Funds 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 Large with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and American Funds.
Diversification Opportunities for Touchstone Large and American Funds
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Touchstone and American is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and American Funds Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Strategic and Touchstone Large 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 Large Cap are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Strategic has no effect on the direction of Touchstone Large i.e., Touchstone Large and American Funds go up and down completely randomly.
Pair Corralation between Touchstone Large and American Funds
Assuming the 90 days horizon Touchstone Large Cap is expected to generate 2.2 times more return on investment than American Funds. However, Touchstone Large is 2.2 times more volatile than American Funds Strategic. It trades about 0.29 of its potential returns per unit of risk. American Funds Strategic is currently generating about -0.03 per unit of risk. If you would invest 1,968 in Touchstone Large Cap on August 28, 2024 and sell it today you would earn a total of 95.00 from holding Touchstone Large Cap or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Large Cap vs. American Funds Strategic
Performance |
| Timeline |
| Touchstone Large Cap |
| American Funds Strategic |
Touchstone Large and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and American Funds
The main advantage of trading using opposite Touchstone Large and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| Touchstone Large vs. Touchstone Small Cap | Touchstone Large vs. Touchstone Sands Capital | Touchstone Large vs. Mid Cap Growth | Touchstone Large vs. Mid Cap Growth |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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