Correlation Between High Yield and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both High Yield 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 High Yield and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund and Touchstone Large Cap, you can compare the effects of market volatilities on High Yield 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 High Yield with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Touchstone Large.
Diversification Opportunities for High Yield and Touchstone Large
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and Touchstone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding High Yield 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 High Yield 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 High Yield 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 High Yield i.e., High Yield and Touchstone Large go up and down completely randomly.
Pair Corralation between High Yield and Touchstone Large
Assuming the 90 days horizon High Yield Fund is expected to generate 0.25 times more return on investment than Touchstone Large. However, High Yield Fund is 4.07 times less risky than Touchstone Large. It trades about -0.28 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about -0.37 per unit of risk. If you would invest 756.00 in High Yield Fund on October 10, 2024 and sell it today you would lose (10.00) from holding High Yield Fund or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund vs. Touchstone Large Cap
Performance |
| Timeline |
| High Yield Fund |
| Touchstone Large Cap |
High Yield and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Touchstone Large
The main advantage of trading using opposite High Yield and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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.| High Yield vs. Touchstone Small Cap | High Yield vs. Touchstone Sands Capital | High Yield vs. Mid Cap Growth | High Yield vs. Mid Cap Growth |
| Touchstone Large vs. Artisan Global Opportunities | Touchstone Large vs. Asg Global Alternatives | Touchstone Large vs. Wisdomtree Siegel Global | Touchstone Large vs. Ab Global Bond |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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