Correlation Between Touchstone Small and Eafe Choice
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Eafe Choice 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 Eafe Choice 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 The Eafe Choice, you can compare the effects of market volatilities on Touchstone Small and Eafe Choice 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 Eafe Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Eafe Choice.
Diversification Opportunities for Touchstone Small and Eafe Choice
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Touchstone and Eafe is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and The Eafe Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Choice 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 Eafe Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Choice has no effect on the direction of Touchstone Small i.e., Touchstone Small and Eafe Choice go up and down completely randomly.
Pair Corralation between Touchstone Small and Eafe Choice
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 0.98 times more return on investment than Eafe Choice. However, Touchstone Small Cap is 1.02 times less risky than Eafe Choice. It trades about 0.19 of its potential returns per unit of risk. The Eafe Choice is currently generating about 0.05 per unit of risk. If you would invest 3,850 in Touchstone Small Cap on October 25, 2024 and sell it today you would earn a total of 125.00 from holding Touchstone Small Cap or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Touchstone Small Cap vs. The Eafe Choice
Performance |
| Timeline |
| Touchstone Small Cap |
| Eafe Choice |
Touchstone Small and Eafe Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Eafe Choice
The main advantage of trading using opposite Touchstone Small and Eafe Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Eafe Choice 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 Eafe Choice will offset losses from the drop in Eafe Choice's long position.| Touchstone Small vs. Deutsche Gold Precious | Touchstone Small vs. James Balanced Golden | Touchstone Small vs. Sprott Gold Equity | Touchstone Small vs. First Eagle Gold |
| Eafe Choice vs. Us Vector Equity | Eafe Choice vs. Gmo Global Equity | Eafe Choice vs. Transamerica International Equity | Eafe Choice vs. Calvert International Equity |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |