Correlation Between Touchstone Large and First Investors
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and First Investors 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 First Investors 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 First Investors Select, you can compare the effects of market volatilities on Touchstone Large and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and First Investors.
Diversification Opportunities for Touchstone Large and First Investors
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Touchstone Large i.e., Touchstone Large and First Investors go up and down completely randomly.
Pair Corralation between Touchstone Large and First Investors
Assuming the 90 days horizon Touchstone Large is expected to generate 1.5 times less return on investment than First Investors. But when comparing it to its historical volatility, Touchstone Large Cap is 1.26 times less risky than First Investors. It trades about 0.09 of its potential returns per unit of risk. First Investors Select is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,024 in First Investors Select on August 29, 2024 and sell it today you would earn a total of 357.00 from holding First Investors Select or generate 34.86% 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. First Investors Select
Performance |
| Timeline |
| Touchstone Large Cap |
| First Investors Select |
Touchstone Large and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and First Investors
The main advantage of trading using opposite Touchstone Large and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Touchstone Large vs. Vanguard Total Stock | Touchstone Large vs. Vanguard 500 Index | Touchstone Large vs. Vanguard Total Stock | Touchstone Large vs. Vanguard Total Stock |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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