Correlation Between Touchstone Flexible and Western Asset
Can any of the company-specific risk be diversified away by investing in both Touchstone Flexible 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 Flexible 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 Flexible Income and Western Asset High, you can compare the effects of market volatilities on Touchstone Flexible 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 Flexible with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Flexible and Western Asset.
Diversification Opportunities for Touchstone Flexible and Western Asset
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TOUCHSTONE and Western is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Flexible Income and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High and Touchstone Flexible 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 Flexible Income 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 High has no effect on the direction of Touchstone Flexible i.e., Touchstone Flexible and Western Asset go up and down completely randomly.
Pair Corralation between Touchstone Flexible and Western Asset
Assuming the 90 days horizon Touchstone Flexible is expected to generate 1.21 times less return on investment than Western Asset. But when comparing it to its historical volatility, Touchstone Flexible Income is 1.68 times less risky than Western Asset. It trades about 0.15 of its potential returns per unit of risk. Western Asset High is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 591.00 in Western Asset High on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Western Asset High or generate 17.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Flexible Income vs. Western Asset High
Performance |
| Timeline |
| Touchstone Flexible |
| Western Asset High |
Touchstone Flexible and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Flexible and Western Asset
The main advantage of trading using opposite Touchstone Flexible and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Flexible 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 Flexible vs. Touchstone Small Cap | Touchstone Flexible vs. Touchstone Sands Capital | Touchstone Flexible vs. Mid Cap Growth | Touchstone Flexible vs. Mid Cap Growth |
| Western Asset vs. Transamerica Emerging Markets | Western Asset vs. Pnc Emerging Markets | Western Asset vs. Locorr Market Trend | Western Asset vs. Aqr Sustainable Long Short |
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 CEOs Directory module to screen CEOs from public companies around the world.
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