Correlation Between Touchstone Small and Champlain Small
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Champlain Small 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 Champlain Small 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 Champlain Small, you can compare the effects of market volatilities on Touchstone Small and Champlain Small 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 Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Champlain Small.
Diversification Opportunities for Touchstone Small and Champlain Small
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Champlain is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small 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 Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Touchstone Small i.e., Touchstone Small and Champlain Small go up and down completely randomly.
Pair Corralation between Touchstone Small and Champlain Small
Assuming the 90 days horizon Touchstone Small is expected to generate 1.38 times less return on investment than Champlain Small. But when comparing it to its historical volatility, Touchstone Small Cap is 1.03 times less risky than Champlain Small. It trades about 0.25 of its potential returns per unit of risk. Champlain Small is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,312 in Champlain Small on August 28, 2024 and sell it today you would earn a total of 270.00 from holding Champlain Small or generate 11.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Champlain Small
Performance |
| Timeline |
| Touchstone Small Cap |
| Champlain Small |
Touchstone Small and Champlain Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Champlain Small
The main advantage of trading using opposite Touchstone Small and Champlain Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Champlain Small 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 Champlain Small will offset losses from the drop in Champlain Small's long position.| Touchstone Small vs. Legg Mason Bw | Touchstone Small vs. Old Westbury Large | Touchstone Small vs. Rational Strategic Allocation | Touchstone Small vs. Goldman Sachs Large |
| Champlain Small vs. Washington Mutual Investors | Champlain Small vs. Baron Emerging Markets | Champlain Small vs. Aquagold International | Champlain Small vs. Morningstar Unconstrained Allocation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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