Correlation Between Touchstone Focused and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Touchstone Focused and Touchstone 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 Focused and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Focused Fund and Touchstone Large Cap, you can compare the effects of market volatilities on Touchstone Focused and Touchstone 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 Focused with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Focused and Touchstone Large.
Diversification Opportunities for Touchstone Focused and Touchstone Large
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Touchstone is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Focused Fund and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap and Touchstone Focused 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 Focused Fund are associated (or correlated) with Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Touchstone Focused i.e., Touchstone Focused and Touchstone Large go up and down completely randomly.
Pair Corralation between Touchstone Focused and Touchstone Large
Assuming the 90 days horizon Touchstone Focused Fund is expected to generate 1.06 times more return on investment than Touchstone Large. However, Touchstone Focused is 1.06 times more volatile than Touchstone Large Cap. It trades about 0.11 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.09 per unit of risk. If you would invest 5,175 in Touchstone Focused Fund on August 28, 2024 and sell it today you would earn a total of 2,453 from holding Touchstone Focused Fund or generate 47.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Focused Fund vs. Touchstone Large Cap
Performance |
| Timeline |
| Touchstone Focused |
| Touchstone Large Cap |
Touchstone Focused and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Focused and Touchstone Large
The main advantage of trading using opposite Touchstone Focused and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Focused position performs unexpectedly, Touchstone 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 Touchstone Large will offset losses from the drop in Touchstone Large's long position.| Touchstone Focused vs. Touchstone Small Cap | Touchstone Focused vs. Touchstone Sands Capital | Touchstone Focused vs. Mid Cap Growth | Touchstone Focused vs. Mid Cap Growth |
| Touchstone Large vs. Touchstone Small Cap | Touchstone Large vs. Touchstone Sands Capital | Touchstone Large vs. Mid Cap Growth | Touchstone Large vs. Mid Cap Growth |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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