Correlation Between Touchstone Funds and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Touchstone Funds and Growth Opportunities 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 Funds and Growth Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Funds Group and Growth Opportunities Fund, you can compare the effects of market volatilities on Touchstone Funds and Growth Opportunities 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 Funds with a short position of Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Funds and Growth Opportunities.
Diversification Opportunities for Touchstone Funds and Growth Opportunities
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Touchstone and Growth is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Funds Group and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities and Touchstone Funds 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 Funds Group are associated (or correlated) with Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Touchstone Funds i.e., Touchstone Funds and Growth Opportunities go up and down completely randomly.
Pair Corralation between Touchstone Funds and Growth Opportunities
Assuming the 90 days horizon Touchstone Funds is expected to generate 5.72 times less return on investment than Growth Opportunities. But when comparing it to its historical volatility, Touchstone Funds Group is 2.53 times less risky than Growth Opportunities. It trades about 0.05 of its potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,559 in Growth Opportunities Fund on August 31, 2024 and sell it today you would earn a total of 1,691 from holding Growth Opportunities Fund or generate 47.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Funds Group vs. Growth Opportunities Fund
Performance |
| Timeline |
| Touchstone Funds |
| Growth Opportunities |
Touchstone Funds and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Funds and Growth Opportunities
The main advantage of trading using opposite Touchstone Funds and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Funds position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Touchstone Funds vs. Baron Health Care | Touchstone Funds vs. Live Oak Health | Touchstone Funds vs. Alphacentric Lifesci Healthcare | Touchstone Funds vs. Blackrock Health Sciences |
| Growth Opportunities vs. Rationalpier 88 Convertible | Growth Opportunities vs. Allianzgi Convertible Income | Growth Opportunities vs. Virtus Convertible | Growth Opportunities vs. Gabelli Convertible And |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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