Correlation Between Touchstone International and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both Touchstone International and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners International, you can compare the effects of market volatilities on Touchstone International and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Longleaf Partners.
Diversification Opportunities for Touchstone International and Longleaf Partners
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Longleaf is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and Longleaf Partners Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of Touchstone International i.e., Touchstone International and Longleaf Partners go up and down completely randomly.
Pair Corralation between Touchstone International and Longleaf Partners
Assuming the 90 days horizon Touchstone International Equity is expected to generate 0.92 times more return on investment than Longleaf Partners. However, Touchstone International Equity is 1.09 times less risky than Longleaf Partners. It trades about -0.23 of its potential returns per unit of risk. Longleaf Partners International is currently generating about -0.25 per unit of risk. If you would invest 1,635 in Touchstone International Equity on August 28, 2024 and sell it today you would lose (68.00) from holding Touchstone International Equity or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone International Equit vs. Longleaf Partners Internationa
Performance |
| Timeline |
| Touchstone International |
| Longleaf Partners |
Touchstone International and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and Longleaf Partners
The main advantage of trading using opposite Touchstone International and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, Longleaf Partners 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 Longleaf Partners will offset losses from the drop in Longleaf Partners' long position.| Touchstone International vs. Touchstone Small Cap | Touchstone International vs. Touchstone Sands Capital | Touchstone International vs. Mid Cap Growth | Touchstone International vs. Mid Cap Growth |
| Longleaf Partners vs. Longleaf Partners Global | Longleaf Partners vs. Longleaf Partners Fund | Longleaf Partners vs. Longleaf Partners Small Cap | Longleaf Partners vs. Vanguard Target Retirement |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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