Correlation Between Touchstone Ultra and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Touchstone Ultra and Equity Growth 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 Ultra and Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Ultra Short and Equity Growth Fund, you can compare the effects of market volatilities on Touchstone Ultra and Equity Growth 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 Ultra with a short position of Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Ultra and Equity Growth.
Diversification Opportunities for Touchstone Ultra and Equity Growth
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Equity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Ultra Short and Equity Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth and Touchstone Ultra 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 Ultra Short are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of Touchstone Ultra i.e., Touchstone Ultra and Equity Growth go up and down completely randomly.
Pair Corralation between Touchstone Ultra and Equity Growth
Assuming the 90 days horizon Touchstone Ultra is expected to generate 25.32 times less return on investment than Equity Growth. But when comparing it to its historical volatility, Touchstone Ultra Short is 13.07 times less risky than Equity Growth. It trades about 0.18 of its potential returns per unit of risk. Equity Growth Fund is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,273 in Equity Growth Fund on September 2, 2024 and sell it today you would earn a total of 182.00 from holding Equity Growth Fund or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Ultra Short vs. Equity Growth Fund
Performance |
| Timeline |
| Touchstone Ultra Short |
| Equity Growth |
Touchstone Ultra and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Ultra and Equity Growth
The main advantage of trading using opposite Touchstone Ultra and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Ultra position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| Touchstone Ultra vs. Touchstone Small Cap | Touchstone Ultra vs. Touchstone Sands Capital | Touchstone Ultra vs. Mid Cap Growth | Touchstone Ultra vs. Mid Cap Growth |
| Equity Growth vs. Touchstone Large Cap | Equity Growth vs. Morningstar Unconstrained Allocation | Equity Growth vs. Goldman Sachs Large | Equity Growth vs. Principal Lifetime Hybrid |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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