Correlation Between Touchstone Small and Barings Active
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Barings Active 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 Barings Active 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 Barings Active Short, you can compare the effects of market volatilities on Touchstone Small and Barings Active 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 Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Barings Active.
Diversification Opportunities for Touchstone Small and Barings Active
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Touchstone and Barings is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short 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 Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Touchstone Small i.e., Touchstone Small and Barings Active go up and down completely randomly.
Pair Corralation between Touchstone Small and Barings Active
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 8.12 times more return on investment than Barings Active. However, Touchstone Small is 8.12 times more volatile than Barings Active Short. It trades about 0.24 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.16 per unit of risk. If you would invest 3,807 in Touchstone Small Cap on October 29, 2024 and sell it today you would earn a total of 150.00 from holding Touchstone Small Cap or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Barings Active Short
Performance |
| Timeline |
| Touchstone Small Cap |
| Barings Active Short |
Touchstone Small and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Barings Active
The main advantage of trading using opposite Touchstone Small and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active's long position.| Touchstone Small vs. Dodge Cox Stock | Touchstone Small vs. Nuveen Nwq Large Cap | Touchstone Small vs. Americafirst Large Cap | Touchstone Small vs. Qs Large Cap |
| Barings Active vs. Dunham High Yield | Barings Active vs. Fidelity Capital Income | Barings Active vs. Lord Abbett Short | Barings Active vs. Artisan High Income |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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