Correlation Between Touchstone Large and Guidemark Smallmid
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Guidemark Smallmid 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 Guidemark Smallmid 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 Guidemark Smallmid Cap, you can compare the effects of market volatilities on Touchstone Large and Guidemark Smallmid 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 Guidemark Smallmid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Guidemark Smallmid.
Diversification Opportunities for Touchstone Large and Guidemark Smallmid
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Touchstone and Guidemark is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap 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 Guidemark Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Touchstone Large i.e., Touchstone Large and Guidemark Smallmid go up and down completely randomly.
Pair Corralation between Touchstone Large and Guidemark Smallmid
Assuming the 90 days horizon Touchstone Large Cap is expected to generate 0.72 times more return on investment than Guidemark Smallmid. However, Touchstone Large Cap is 1.39 times less risky than Guidemark Smallmid. It trades about -0.06 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about -0.41 per unit of risk. If you would invest 1,976 in Touchstone Large Cap on December 7, 2024 and sell it today you would lose (21.00) from holding Touchstone Large Cap or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Large Cap vs. Guidemark Smallmid Cap
Performance |
| Timeline |
| Touchstone Large Cap |
| Guidemark Smallmid Cap |
Touchstone Large and Guidemark Smallmid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and Guidemark Smallmid
The main advantage of trading using opposite Touchstone Large and Guidemark Smallmid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Guidemark Smallmid 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 Guidemark Smallmid will offset losses from the drop in Guidemark Smallmid's long position.| Touchstone Large vs. Pace Large Value | Touchstone Large vs. Lord Abbett Affiliated | Touchstone Large vs. Profunds Large Cap Growth | Touchstone Large vs. Fidelity Large Cap |
| Guidemark Smallmid vs. Timothy Largemid Cap Value | Guidemark Smallmid vs. Timothy Plan Large | Guidemark Smallmid vs. Timothy Aggressive Growth | Guidemark Smallmid vs. Timothy Plan International |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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