Correlation Between Touchstone ETF and US Treasury
Can any of the company-specific risk be diversified away by investing in both Touchstone ETF and US Treasury 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 ETF and US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone ETF Trust and US Treasury 12, you can compare the effects of market volatilities on Touchstone ETF and US Treasury 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 ETF with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone ETF and US Treasury.
Diversification Opportunities for Touchstone ETF and US Treasury
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and OBIL is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone ETF Trust and US Treasury 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 12 and Touchstone ETF 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 ETF Trust are associated (or correlated) with US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 12 has no effect on the direction of Touchstone ETF i.e., Touchstone ETF and US Treasury go up and down completely randomly.
Pair Corralation between Touchstone ETF and US Treasury
Given the investment horizon of 90 days Touchstone ETF Trust is expected to generate 1.42 times more return on investment than US Treasury. However, Touchstone ETF is 1.42 times more volatile than US Treasury 12. It trades about 0.35 of its potential returns per unit of risk. US Treasury 12 is currently generating about 0.43 per unit of risk. If you would invest 2,457 in Touchstone ETF Trust on September 1, 2024 and sell it today you would earn a total of 79.00 from holding Touchstone ETF Trust or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Touchstone ETF Trust vs. US Treasury 12
Performance |
| Timeline |
| Touchstone ETF Trust |
| US Treasury 12 |
Touchstone ETF and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone ETF and US Treasury
The main advantage of trading using opposite Touchstone ETF and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone ETF position performs unexpectedly, US Treasury 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 US Treasury will offset losses from the drop in US Treasury's long position.| Touchstone ETF vs. iShares Interest Rate | Touchstone ETF vs. iShares Interest Rate | Touchstone ETF vs. iShares Edge Investment | Touchstone ETF vs. iShares Inflation Hedged |
| US Treasury vs. SPDR Barclays Long | US Treasury vs. SPDR Portfolio Intermediate | US Treasury vs. SPDR Barclays Short | US Treasury vs. SPDR Barclays Intermediate |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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