Correlation Between Touchstone Large and Western Asset
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Western Asset 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 Western Asset 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 Western Asset Diversified, you can compare the effects of market volatilities on Touchstone Large and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Western Asset.
Diversification Opportunities for Touchstone Large and Western Asset
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Touchstone and Western is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Touchstone Large i.e., Touchstone Large and Western Asset go up and down completely randomly.
Pair Corralation between Touchstone Large and Western Asset
Assuming the 90 days horizon Touchstone Large Cap is expected to under-perform the Western Asset. In addition to that, Touchstone Large is 3.66 times more volatile than Western Asset Diversified. It trades about -0.4 of its total potential returns per unit of risk. Western Asset Diversified is currently generating about -0.07 per unit of volatility. If you would invest 1,537 in Western Asset Diversified on September 23, 2024 and sell it today you would lose (5.00) from holding Western Asset Diversified or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Large Cap vs. Western Asset Diversified
Performance |
| Timeline |
| Touchstone Large Cap |
| Western Asset Diversified |
Touchstone Large and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and Western Asset
The main advantage of trading using opposite Touchstone Large and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Touchstone Large vs. Morningstar Unconstrained Allocation | Touchstone Large vs. Aqr Large Cap | Touchstone Large vs. Fisher Large Cap |
| Western Asset vs. Virtus Nfj Large Cap | Western Asset vs. Large Cap Growth Profund | Western Asset vs. Dunham Large Cap | Western Asset vs. Touchstone Large Cap |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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