Correlation Between Touchstone Premium and American Funds
Can any of the company-specific risk be diversified away by investing in both Touchstone Premium and American 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 American 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 American Funds Income, you can compare the effects of market volatilities on Touchstone Premium and American 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Premium and American Funds.
Diversification Opportunities for Touchstone Premium and American Funds
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and American is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Income has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and American Funds go up and down completely randomly.
Pair Corralation between Touchstone Premium and American Funds
Assuming the 90 days horizon Touchstone Premium Yield is expected to generate 3.11 times more return on investment than American Funds. However, Touchstone Premium is 3.11 times more volatile than American Funds Income. It trades about 0.07 of its potential returns per unit of risk. American Funds Income is currently generating about 0.14 per unit of risk. If you would invest 866.00 in Touchstone Premium Yield on September 5, 2024 and sell it today you would earn a total of 35.00 from holding Touchstone Premium Yield or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Touchstone Premium Yield vs. American Funds Income
Performance |
| Timeline |
| Touchstone Premium Yield |
| American Funds Income |
Touchstone Premium and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Premium and American Funds
The main advantage of trading using opposite Touchstone Premium and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Premium position performs unexpectedly, American 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 American Funds will offset losses from the drop in American Funds' long position.| Touchstone Premium vs. Pioneer High Yield | Touchstone Premium vs. Dunham High Yield | Touchstone Premium vs. Pgim High Yield | Touchstone Premium vs. Gmo High Yield |
| American Funds vs. Sei Daily Income | American Funds vs. Lind Capital Partners | American Funds vs. Touchstone Premium Yield | American Funds vs. Legg Mason Partners |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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