Correlation Between Touchstone International and American Mutual
Can any of the company-specific risk be diversified away by investing in both Touchstone International and American Mutual 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 International and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone International Equity and American Mutual Fund, you can compare the effects of market volatilities on Touchstone International and American Mutual 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 International with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and American Mutual.
Diversification Opportunities for Touchstone International and American Mutual
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Touchstone and American is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Touchstone International 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 International Equity are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Touchstone International i.e., Touchstone International and American Mutual go up and down completely randomly.
Pair Corralation between Touchstone International and American Mutual
Assuming the 90 days horizon Touchstone International Equity is expected to under-perform the American Mutual. In addition to that, Touchstone International is 1.43 times more volatile than American Mutual Fund. It trades about -0.19 of its total potential returns per unit of risk. American Mutual Fund is currently generating about -0.06 per unit of volatility. If you would invest 5,842 in American Mutual Fund on August 24, 2024 and sell it today you would lose (47.00) from holding American Mutual Fund or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone International Equit vs. American Mutual Fund
Performance |
| Timeline |
| Touchstone International |
| American Mutual |
Touchstone International and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and American Mutual
The main advantage of trading using opposite Touchstone International and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Touchstone International vs. Longleaf Partners International | Touchstone International vs. HUMANA INC | Touchstone International vs. Aquagold International | Touchstone International vs. Barloworld Ltd ADR |
| American Mutual vs. Dreyfusstandish Global Fixed | American Mutual vs. Balanced Fund Retail | American Mutual vs. Touchstone International Equity | American Mutual vs. Ultra Short Term Fixed |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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