Correlation Between Touchstone Strategic and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both Touchstone Strategic and Hennessy Cornerstone 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 Strategic and Hennessy Cornerstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Strategic Trust and Hennessy Nerstone Mid, you can compare the effects of market volatilities on Touchstone Strategic and Hennessy Cornerstone 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 Strategic with a short position of Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Strategic and Hennessy Cornerstone.
Diversification Opportunities for Touchstone Strategic and Hennessy Cornerstone
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Hennessy is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Strategic Trust and Hennessy Nerstone Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Mid and Touchstone Strategic 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 Strategic Trust are associated (or correlated) with Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Mid has no effect on the direction of Touchstone Strategic i.e., Touchstone Strategic and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between Touchstone Strategic and Hennessy Cornerstone
Assuming the 90 days horizon Touchstone Strategic is expected to generate 1.43 times less return on investment than Hennessy Cornerstone. But when comparing it to its historical volatility, Touchstone Strategic Trust is 1.93 times less risky than Hennessy Cornerstone. It trades about 0.15 of its potential returns per unit of risk. Hennessy Nerstone Mid is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,957 in Hennessy Nerstone Mid on September 1, 2024 and sell it today you would earn a total of 942.00 from holding Hennessy Nerstone Mid or generate 48.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Touchstone Strategic Trust vs. Hennessy Nerstone Mid
Performance |
| Timeline |
| Touchstone Strategic |
| Hennessy Nerstone Mid |
Touchstone Strategic and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Strategic and Hennessy Cornerstone
The main advantage of trading using opposite Touchstone Strategic and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Strategic position performs unexpectedly, Hennessy Cornerstone 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 Hennessy Cornerstone will offset losses from the drop in Hennessy Cornerstone's long position.| Touchstone Strategic vs. Touchstone Small Cap | Touchstone Strategic vs. Touchstone Sands Capital | Touchstone Strategic vs. Mid Cap Growth | Touchstone Strategic vs. Mid Cap Growth |
| Hennessy Cornerstone vs. Hennessy Focus Fund | Hennessy Cornerstone vs. Small Company Stock Fund | Hennessy Cornerstone vs. Large Cap E | Hennessy Cornerstone vs. Eventide Gilead Fund |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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