Correlation Between Touchstone Premium and Financial Services
Can any of the company-specific risk be diversified away by investing in both Touchstone Premium and Financial Services 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 Financial Services 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 Financial Services Fund, you can compare the effects of market volatilities on Touchstone Premium and Financial Services 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 Financial Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Premium and Financial Services.
Diversification Opportunities for Touchstone Premium and Financial Services
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Touchstone and Financial is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and Financial Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Services 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 Financial Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Services has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and Financial Services go up and down completely randomly.
Pair Corralation between Touchstone Premium and Financial Services
Assuming the 90 days horizon Touchstone Premium Yield is expected to generate 1.13 times more return on investment than Financial Services. However, Touchstone Premium is 1.13 times more volatile than Financial Services Fund. It trades about 0.27 of its potential returns per unit of risk. Financial Services Fund is currently generating about -0.04 per unit of risk. If you would invest 879.00 in Touchstone Premium Yield on September 12, 2024 and sell it today you would earn a total of 35.00 from holding Touchstone Premium Yield or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Touchstone Premium Yield vs. Financial Services Fund
Performance |
| Timeline |
| Touchstone Premium Yield |
| Financial Services |
Touchstone Premium and Financial Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Premium and Financial Services
The main advantage of trading using opposite Touchstone Premium and Financial Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Premium position performs unexpectedly, Financial Services 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 Financial Services will offset losses from the drop in Financial Services' long position.| Touchstone Premium vs. Europacific Growth Fund | Touchstone Premium vs. SCOR PK | Touchstone Premium vs. Morningstar Unconstrained Allocation | Touchstone Premium vs. Thrivent High Yield |
| Financial Services vs. Pax High Yield | Financial Services vs. Prudential High Yield | Financial Services vs. Guggenheim High Yield | Financial Services vs. City National Rochdale |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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