Correlation Between Touchstone ETF and Vanguard ESG
Can any of the company-specific risk be diversified away by investing in both Touchstone ETF and Vanguard ESG 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 Vanguard ESG 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 Vanguard ESG Corporate, you can compare the effects of market volatilities on Touchstone ETF and Vanguard ESG 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 Vanguard ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone ETF and Vanguard ESG.
Diversification Opportunities for Touchstone ETF and Vanguard ESG
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Touchstone and Vanguard is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone ETF Trust and Vanguard ESG Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard ESG Corporate 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 Vanguard ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard ESG Corporate has no effect on the direction of Touchstone ETF i.e., Touchstone ETF and Vanguard ESG go up and down completely randomly.
Pair Corralation between Touchstone ETF and Vanguard ESG
Given the investment horizon of 90 days Touchstone ETF is expected to generate 1.23 times less return on investment than Vanguard ESG. But when comparing it to its historical volatility, Touchstone ETF Trust is 3.94 times less risky than Vanguard ESG. It trades about 0.38 of its potential returns per unit of risk. Vanguard ESG Corporate is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,231 in Vanguard ESG Corporate on December 8, 2024 and sell it today you would earn a total of 45.00 from holding Vanguard ESG Corporate or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone ETF Trust vs. Vanguard ESG Corporate
Performance |
| Timeline |
| Touchstone ETF Trust |
| Vanguard ESG Corporate |
Touchstone ETF and Vanguard ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone ETF and Vanguard ESG
The main advantage of trading using opposite Touchstone ETF and Vanguard ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone ETF position performs unexpectedly, Vanguard ESG 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 ESG will offset losses from the drop in Vanguard ESG's long position.| Touchstone ETF vs. Valued Advisers Trust | ||
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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