Correlation Between Touchstone Large and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Emerging Markets 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 Emerging Markets 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 Emerging Markets Fund, you can compare the effects of market volatilities on Touchstone Large and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Emerging Markets.
Diversification Opportunities for Touchstone Large and Emerging Markets
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Touchstone and Emerging is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Touchstone Large i.e., Touchstone Large and Emerging Markets go up and down completely randomly.
Pair Corralation between Touchstone Large and Emerging Markets
Assuming the 90 days horizon Touchstone Large Cap is expected to generate 0.98 times more return on investment than Emerging Markets. However, Touchstone Large Cap is 1.02 times less risky than Emerging Markets. It trades about 0.37 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about -0.12 per unit of risk. If you would invest 1,950 in Touchstone Large Cap on September 1, 2024 and sell it today you would earn a total of 117.00 from holding Touchstone Large Cap or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Touchstone Large Cap vs. Emerging Markets Fund
Performance |
| Timeline |
| Touchstone Large Cap |
| Emerging Markets |
Touchstone Large and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and Emerging Markets
The main advantage of trading using opposite Touchstone Large and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Touchstone Large vs. Touchstone Small Cap | Touchstone Large vs. Mid Cap Growth | Touchstone Large vs. Mid Cap Growth | Touchstone Large vs. Mid Cap Growth |
| Emerging Markets vs. International Developed Markets | Emerging Markets vs. Global Real Estate | Emerging Markets vs. Global Real Estate | Emerging Markets vs. Global Real Estate |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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