Correlation Between Touchstone International and Pimco Inflation
Can any of the company-specific risk be diversified away by investing in both Touchstone International and Pimco Inflation 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 Pimco Inflation 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 Pimco Inflation Response, you can compare the effects of market volatilities on Touchstone International and Pimco Inflation 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 Pimco Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Pimco Inflation.
Diversification Opportunities for Touchstone International and Pimco Inflation
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Pimco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and Pimco Inflation Response in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Inflation Response 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 Pimco Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Inflation Response has no effect on the direction of Touchstone International i.e., Touchstone International and Pimco Inflation go up and down completely randomly.
Pair Corralation between Touchstone International and Pimco Inflation
Assuming the 90 days horizon Touchstone International Equity is expected to under-perform the Pimco Inflation. In addition to that, Touchstone International is 2.07 times more volatile than Pimco Inflation Response. It trades about -0.08 of its total potential returns per unit of risk. Pimco Inflation Response is currently generating about 0.13 per unit of volatility. If you would invest 832.00 in Pimco Inflation Response on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Pimco Inflation Response or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone International Equit vs. Pimco Inflation Response
Performance |
| Timeline |
| Touchstone International |
| Pimco Inflation Response |
Touchstone International and Pimco Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and Pimco Inflation
The main advantage of trading using opposite Touchstone International and Pimco Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, Pimco Inflation 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 Pimco Inflation will offset losses from the drop in Pimco Inflation's long position.The idea behind Touchstone International Equity and Pimco Inflation Response 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.
| Pimco Inflation vs. Touchstone International Equity | Pimco Inflation vs. Ms Global Fixed | Pimco Inflation vs. Dodge International Stock | Pimco Inflation vs. Gmo Global Equity |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |