Correlation Between Touchstone Premium and Ishares Russell

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Touchstone Premium and Ishares Russell 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 Premium and Ishares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Premium Yield and Ishares Russell 2000, you can compare the effects of market volatilities on Touchstone Premium and Ishares Russell 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 Premium with a short position of Ishares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Premium and Ishares Russell.

Diversification Opportunities for Touchstone Premium and Ishares Russell

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Touchstone and Ishares is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and Ishares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Russell 2000 and Touchstone Premium 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 Premium Yield are associated (or correlated) with Ishares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Russell 2000 has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and Ishares Russell go up and down completely randomly.

Pair Corralation between Touchstone Premium and Ishares Russell

Assuming the 90 days horizon Touchstone Premium is expected to generate 1.32 times less return on investment than Ishares Russell. But when comparing it to its historical volatility, Touchstone Premium Yield is 1.29 times less risky than Ishares Russell. It trades about 0.07 of its potential returns per unit of risk. Ishares Russell 2000 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,413  in Ishares Russell 2000 on September 12, 2024 and sell it today you would earn a total of  747.00  from holding Ishares Russell 2000 or generate 30.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.7%
ValuesDaily Returns

Touchstone Premium Yield  vs.  Ishares Russell 2000

 Performance 
       Timeline  
Touchstone Premium Yield 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Premium Yield are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Touchstone Premium is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Ishares Russell 2000 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Russell 2000 are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ishares Russell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Touchstone Premium and Ishares Russell Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Touchstone Premium and Ishares Russell

The main advantage of trading using opposite Touchstone Premium and Ishares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Premium position performs unexpectedly, Ishares Russell 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 Ishares Russell will offset losses from the drop in Ishares Russell's long position.
The idea behind Touchstone Premium Yield and Ishares Russell 2000 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios