Correlation Between Touchstone Large and Simt Large

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Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Simt Large 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 Simt Large 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 Simt Large Cap, you can compare the effects of market volatilities on Touchstone Large and Simt Large 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 Simt Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Simt Large.

Diversification Opportunities for Touchstone Large and Simt Large

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Touchstone and Simt is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Simt Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Large 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 Simt Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Large Cap has no effect on the direction of Touchstone Large i.e., Touchstone Large and Simt Large go up and down completely randomly.

Pair Corralation between Touchstone Large and Simt Large

Assuming the 90 days horizon Touchstone Large is expected to generate 1.05 times less return on investment than Simt Large. In addition to that, Touchstone Large is 1.0 times more volatile than Simt Large Cap. It trades about 0.4 of its total potential returns per unit of risk. Simt Large Cap is currently generating about 0.42 per unit of volatility. If you would invest  1,663  in Simt Large Cap on September 3, 2024 and sell it today you would earn a total of  108.00  from holding Simt Large Cap or generate 6.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Touchstone Large Cap  vs.  Simt Large Cap

 Performance 
       Timeline  
Touchstone Large Cap 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Large Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Touchstone Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Simt Large Cap 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Simt Large Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Simt Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Touchstone Large and Simt Large Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Touchstone Large and Simt Large

The main advantage of trading using opposite Touchstone Large and Simt Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Simt Large 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 Simt Large will offset losses from the drop in Simt Large's long position.
The idea behind Touchstone Large Cap and Simt Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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