Correlation Between Touchstone Premium and Homestead Funds
Can any of the company-specific risk be diversified away by investing in both Touchstone Premium and Homestead Funds 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 Homestead Funds 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 Homestead Funds , you can compare the effects of market volatilities on Touchstone Premium and Homestead Funds 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 Homestead Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Premium and Homestead Funds.
Diversification Opportunities for Touchstone Premium and Homestead Funds
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Touchstone and Homestead is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and Homestead Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homestead Funds 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 Homestead Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homestead Funds has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and Homestead Funds go up and down completely randomly.
Pair Corralation between Touchstone Premium and Homestead Funds
Assuming the 90 days horizon Touchstone Premium Yield is expected to generate 6.61 times more return on investment than Homestead Funds. However, Touchstone Premium is 6.61 times more volatile than Homestead Funds . It trades about 0.08 of its potential returns per unit of risk. Homestead Funds is currently generating about 0.11 per unit of risk. If you would invest 709.00 in Touchstone Premium Yield on September 4, 2024 and sell it today you would earn a total of 185.00 from holding Touchstone Premium Yield or generate 26.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.63% |
| Values | Daily Returns |
Touchstone Premium Yield vs. Homestead Funds
Performance |
| Timeline |
| Touchstone Premium Yield |
| Homestead Funds |
Touchstone Premium and Homestead Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Premium and Homestead Funds
The main advantage of trading using opposite Touchstone Premium and Homestead Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Premium position performs unexpectedly, Homestead Funds 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 Homestead Funds will offset losses from the drop in Homestead Funds' long position.| Touchstone Premium vs. Touchstone Small Cap | Touchstone Premium vs. Touchstone Sands Capital | Touchstone Premium vs. Mid Cap Growth | Touchstone Premium vs. Mid Cap Growth |
| Homestead Funds vs. Bbh Intermediate Municipal | Homestead Funds vs. Ab Impact Municipal | Homestead Funds vs. Legg Mason Partners | Homestead Funds vs. Ab Bond Inflation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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