Correlation Between Touchstone International and Western Asset
Can any of the company-specific risk be diversified away by investing in both Touchstone International and Western Asset 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 Western Asset 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 Western Asset Diversified, you can compare the effects of market volatilities on Touchstone International and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Western Asset.
Diversification Opportunities for Touchstone International and Western Asset
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Touchstone and Western is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Touchstone International i.e., Touchstone International and Western Asset go up and down completely randomly.
Pair Corralation between Touchstone International and Western Asset
Assuming the 90 days horizon Touchstone International Equity is expected to under-perform the Western Asset. In addition to that, Touchstone International is 3.53 times more volatile than Western Asset Diversified. It trades about -0.17 of its total potential returns per unit of risk. Western Asset Diversified is currently generating about -0.03 per unit of volatility. If you would invest 1,553 in Western Asset Diversified on August 24, 2024 and sell it today you would lose (3.00) from holding Western Asset Diversified or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone International Equit vs. Western Asset Diversified
Performance |
| Timeline |
| Touchstone International |
| Western Asset Diversified |
Touchstone International and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and Western Asset
The main advantage of trading using opposite Touchstone International and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Touchstone International vs. Europac Gold Fund | Touchstone International vs. Oppenheimer Gold Special | Touchstone International vs. Fidelity Advisor Gold | Touchstone International vs. Invesco Gold Special |
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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