Correlation Between Touchstone Premium and Value Line
Can any of the company-specific risk be diversified away by investing in both Touchstone Premium and Value Line 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 Value Line 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 Value Line Small, you can compare the effects of market volatilities on Touchstone Premium and Value Line 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 Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Premium and Value Line.
Diversification Opportunities for Touchstone Premium and Value Line
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Touchstone and Value is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and Value Line Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Small 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Small has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and Value Line go up and down completely randomly.
Pair Corralation between Touchstone Premium and Value Line
Assuming the 90 days horizon Touchstone Premium is expected to generate 1.45 times less return on investment than Value Line. But when comparing it to its historical volatility, Touchstone Premium Yield is 1.06 times less risky than Value Line. It trades about 0.06 of its potential returns per unit of risk. Value Line Small is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,551 in Value Line Small on September 4, 2024 and sell it today you would earn a total of 2,111 from holding Value Line Small or generate 46.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Touchstone Premium Yield vs. Value Line Small
Performance |
| Timeline |
| Touchstone Premium Yield |
| Value Line Small |
Touchstone Premium and Value Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Premium and Value Line
The main advantage of trading using opposite Touchstone Premium and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Premium position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line's 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 |
| Value Line vs. T Rowe Price | Value Line vs. Lord Abbett High | Value Line vs. Dunham High Yield | Value Line vs. Pgim High Yield |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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