Correlation Between Touchstone Small and Ab High
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Ab High 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 Ab High 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 Ab High Income, you can compare the effects of market volatilities on Touchstone Small and Ab High 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 Ab High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Ab High.
Diversification Opportunities for Touchstone Small and Ab High
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Touchstone and AGDAX is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Ab High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab High Income 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 Ab High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab High Income has no effect on the direction of Touchstone Small i.e., Touchstone Small and Ab High go up and down completely randomly.
Pair Corralation between Touchstone Small and Ab High
Assuming the 90 days horizon Touchstone Small Cap is expected to under-perform the Ab High. In addition to that, Touchstone Small is 8.5 times more volatile than Ab High Income. It trades about -0.31 of its total potential returns per unit of risk. Ab High Income is currently generating about -0.45 per unit of volatility. If you would invest 705.00 in Ab High Income on October 16, 2024 and sell it today you would lose (8.00) from holding Ab High Income or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Ab High Income
Performance |
| Timeline |
| Touchstone Small Cap |
| Ab High Income |
Touchstone Small and Ab High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Ab High
The main advantage of trading using opposite Touchstone Small and Ab High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Ab High 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 Ab High will offset losses from the drop in Ab High's long position.| Touchstone Small vs. Boston Partners Small | Touchstone Small vs. Lsv Small Cap | Touchstone Small vs. Heartland Value Plus | Touchstone Small vs. William Blair Small |
| Ab High vs. Glg Intl Small | Ab High vs. Champlain Small | Ab High vs. Franklin Small Cap | Ab High vs. Touchstone Small Cap |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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