Correlation Between Touchstone Large and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Old Westbury 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 Old Westbury 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 Old Westbury Small, you can compare the effects of market volatilities on Touchstone Large and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Old Westbury.
Diversification Opportunities for Touchstone Large and Old Westbury
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Old is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Old Westbury Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Small 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Small has no effect on the direction of Touchstone Large i.e., Touchstone Large and Old Westbury go up and down completely randomly.
Pair Corralation between Touchstone Large and Old Westbury
Assuming the 90 days horizon Touchstone Large Cap is expected to generate 0.97 times more return on investment than Old Westbury. However, Touchstone Large Cap is 1.03 times less risky than Old Westbury. It trades about 0.29 of its potential returns per unit of risk. Old Westbury Small is currently generating about 0.16 per unit of risk. If you would invest 1,968 in Touchstone Large Cap on August 27, 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Large Cap vs. Old Westbury Small
Performance |
| Timeline |
| Touchstone Large Cap |
| Old Westbury Small |
Touchstone Large and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and Old Westbury
The main advantage of trading using opposite Touchstone Large and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's 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 |
| Old Westbury vs. Aqr Large Cap | Old Westbury vs. Tax Managed Large Cap | Old Westbury vs. Touchstone Large Cap | Old Westbury vs. Federated Mdt Large |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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