Correlation Between Touchstone International and Deutsche Equity
Can any of the company-specific risk be diversified away by investing in both Touchstone International and Deutsche Equity 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 Deutsche Equity 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 Deutsche Equity 500, you can compare the effects of market volatilities on Touchstone International and Deutsche Equity 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 Deutsche Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Deutsche Equity.
Diversification Opportunities for Touchstone International and Deutsche Equity
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Touchstone and DEUTSCHE is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and Deutsche Equity 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Equity 500 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 Deutsche Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Equity 500 has no effect on the direction of Touchstone International i.e., Touchstone International and Deutsche Equity go up and down completely randomly.
Pair Corralation between Touchstone International and Deutsche Equity
Assuming the 90 days horizon Touchstone International Equity is expected to under-perform the Deutsche Equity. In addition to that, Touchstone International is 1.2 times more volatile than Deutsche Equity 500. It trades about -0.14 of its total potential returns per unit of risk. Deutsche Equity 500 is currently generating about 0.36 per unit of volatility. If you would invest 17,896 in Deutsche Equity 500 on September 1, 2024 and sell it today you would earn a total of 1,048 from holding Deutsche Equity 500 or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Touchstone International Equit vs. Deutsche Equity 500
Performance |
| Timeline |
| Touchstone International |
| Deutsche Equity 500 |
Touchstone International and Deutsche Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and Deutsche Equity
The main advantage of trading using opposite Touchstone International and Deutsche Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, Deutsche Equity 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 Deutsche Equity will offset losses from the drop in Deutsche Equity's long position.The idea behind Touchstone International Equity and Deutsche Equity 500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Deutsche Equity vs. Deutsche Global Small | Deutsche Equity vs. Deutsche Capital Growth | Deutsche Equity vs. Deutsche Sp 500 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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