Correlation Between Touchstone Ultra and Western Asset
Can any of the company-specific risk be diversified away by investing in both Touchstone Ultra and Western Asset 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 Western Asset 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 Western Asset E, you can compare the effects of market volatilities on Touchstone Ultra and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Ultra and Western Asset.
Diversification Opportunities for Touchstone Ultra and Western Asset
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Touchstone and Western is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Ultra Short and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Touchstone Ultra i.e., Touchstone Ultra and Western Asset go up and down completely randomly.
Pair Corralation between Touchstone Ultra and Western Asset
Assuming the 90 days horizon Touchstone Ultra is expected to generate 10.15 times less return on investment than Western Asset. But when comparing it to its historical volatility, Touchstone Ultra Short is 6.93 times less risky than Western Asset. It trades about 0.1 of its potential returns per unit of risk. Western Asset E is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 920.00 in Western Asset E on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Western Asset E or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Ultra Short vs. Western Asset E
Performance |
| Timeline |
| Touchstone Ultra Short |
| Western Asset E |
Touchstone Ultra and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Ultra and Western Asset
The main advantage of trading using opposite Touchstone Ultra and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Ultra position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Touchstone Ultra vs. Issachar Fund Class | Touchstone Ultra vs. Scharf Global Opportunity | Touchstone Ultra vs. Mirova Global Green | Touchstone Ultra vs. Fm Investments Large |
| Western Asset vs. Shelton Emerging Markets | Western Asset vs. Fundvantage Trust | Western Asset vs. Calamos Market Neutral | Western Asset 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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