Correlation Between Touchstone Large and Ariel Appreciation
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Ariel Appreciation 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 Ariel Appreciation 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 Ariel Appreciation Fund, you can compare the effects of market volatilities on Touchstone Large and Ariel Appreciation 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 Ariel Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Ariel Appreciation.
Diversification Opportunities for Touchstone Large and Ariel Appreciation
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Ariel is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Ariel Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel Appreciation 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 Ariel Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel Appreciation has no effect on the direction of Touchstone Large i.e., Touchstone Large and Ariel Appreciation go up and down completely randomly.
Pair Corralation between Touchstone Large and Ariel Appreciation
Assuming the 90 days horizon Touchstone Large is expected to generate 1.31 times less return on investment than Ariel Appreciation. But when comparing it to its historical volatility, Touchstone Large Cap is 1.67 times less risky than Ariel Appreciation. It trades about 0.28 of its potential returns per unit of risk. Ariel Appreciation Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,240 in Ariel Appreciation Fund on August 29, 2024 and sell it today you would earn a total of 265.00 from holding Ariel Appreciation Fund or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Large Cap vs. Ariel Appreciation Fund
Performance |
| Timeline |
| Touchstone Large Cap |
| Ariel Appreciation |
Touchstone Large and Ariel Appreciation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and Ariel Appreciation
The main advantage of trading using opposite Touchstone Large and Ariel Appreciation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Ariel Appreciation 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 Ariel Appreciation will offset losses from the drop in Ariel Appreciation's long position.| Touchstone Large vs. Us Government Securities | Touchstone Large vs. Lord Abbett Government | Touchstone Large vs. Inverse Government Long | Touchstone Large vs. Us Government Plus |
| Ariel Appreciation vs. Clipper Fund Inc | Ariel Appreciation vs. Baron Growth Fund | Ariel Appreciation vs. Third Avenue Value |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |