Correlation Between Touchstone Small and Focused International
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Focused International 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 Small and Focused International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Small Cap and Focused International Growth, you can compare the effects of market volatilities on Touchstone Small and Focused International 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 Small with a short position of Focused International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Focused International.
Diversification Opportunities for Touchstone Small and Focused International
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Touchstone and Focused is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Focused International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused International and Touchstone Small 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 Small Cap are associated (or correlated) with Focused International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused International has no effect on the direction of Touchstone Small i.e., Touchstone Small and Focused International go up and down completely randomly.
Pair Corralation between Touchstone Small and Focused International
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.1 times more return on investment than Focused International. However, Touchstone Small is 1.1 times more volatile than Focused International Growth. It trades about 0.07 of its potential returns per unit of risk. Focused International Growth is currently generating about 0.04 per unit of risk. If you would invest 3,352 in Touchstone Small Cap on November 3, 2024 and sell it today you would earn a total of 594.00 from holding Touchstone Small Cap or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Focused International Growth
Performance |
| Timeline |
| Touchstone Small Cap |
| Focused International |
Touchstone Small and Focused International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Focused International
The main advantage of trading using opposite Touchstone Small and Focused International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Focused International 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 Focused International will offset losses from the drop in Focused International's long position.| Touchstone Small vs. Hewitt Money Market | Touchstone Small vs. Davis Financial Fund | Touchstone Small vs. Voya Government Money | Touchstone Small vs. Prudential Financial Services |
| Focused International vs. Dfa Large | Focused International vs. Dfa Small | Focused International vs. Dfa International | Focused International vs. Dfa International Value |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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