Correlation Between Touchstone International and High Yield
Can any of the company-specific risk be diversified away by investing in both Touchstone International and High Yield 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 High Yield 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 High Yield Portfolio, you can compare the effects of market volatilities on Touchstone International and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and High Yield.
Diversification Opportunities for Touchstone International and High Yield
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Touchstone and High is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and High Yield Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Portfolio 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Portfolio has no effect on the direction of Touchstone International i.e., Touchstone International and High Yield go up and down completely randomly.
Pair Corralation between Touchstone International and High Yield
Assuming the 90 days horizon Touchstone International Equity is expected to under-perform the High Yield. In addition to that, Touchstone International is 5.89 times more volatile than High Yield Portfolio. It trades about -0.15 of its total potential returns per unit of risk. High Yield Portfolio is currently generating about -0.12 per unit of volatility. If you would invest 860.00 in High Yield Portfolio on September 14, 2024 and sell it today you would lose (5.00) from holding High Yield Portfolio or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Touchstone International Equit vs. High Yield Portfolio
Performance |
| Timeline |
| Touchstone International |
| High Yield Portfolio |
Touchstone International and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and High Yield
The main advantage of trading using opposite Touchstone International and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.The idea behind Touchstone International Equity and High Yield Portfolio 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.
| High Yield vs. Guidemark Large Cap | High Yield vs. Fm Investments Large | High Yield vs. Jhancock Disciplined Value | High Yield vs. Morningstar Unconstrained Allocation |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |