Correlation Between Touchstone Premium and Vanguard High-yield
Can any of the company-specific risk be diversified away by investing in both Touchstone Premium and Vanguard High-yield 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 Vanguard High-yield 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 Vanguard High Yield Tax Exempt, you can compare the effects of market volatilities on Touchstone Premium and Vanguard High-yield 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 Vanguard High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Premium and Vanguard High-yield.
Diversification Opportunities for Touchstone Premium and Vanguard High-yield
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Vanguard is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and Vanguard High Yield Tax Exempt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Yield 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 Vanguard High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Yield has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and Vanguard High-yield go up and down completely randomly.
Pair Corralation between Touchstone Premium and Vanguard High-yield
Assuming the 90 days horizon Touchstone Premium Yield is expected to generate 4.1 times more return on investment than Vanguard High-yield. However, Touchstone Premium is 4.1 times more volatile than Vanguard High Yield Tax Exempt. It trades about 0.26 of its potential returns per unit of risk. Vanguard High Yield Tax Exempt is currently generating about 0.14 per unit of risk. If you would invest 831.00 in Touchstone Premium Yield on November 27, 2024 and sell it today you would earn a total of 43.00 from holding Touchstone Premium Yield or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Premium Yield vs. Vanguard High Yield Tax Exempt
Performance |
| Timeline |
| Touchstone Premium Yield |
| Vanguard High Yield |
Touchstone Premium and Vanguard High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Premium and Vanguard High-yield
The main advantage of trading using opposite Touchstone Premium and Vanguard High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Premium position performs unexpectedly, Vanguard High-yield 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 Vanguard High-yield will offset losses from the drop in Vanguard High-yield's long position.| Touchstone Premium vs. T Rowe Price | Touchstone Premium vs. T Rowe Price | Touchstone Premium vs. Boston Partners Small | Touchstone Premium vs. T Rowe Price |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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