Correlation Between Touchstone Small and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Dreyfus Technology 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 Dreyfus Technology 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 Dreyfus Technology Growth, you can compare the effects of market volatilities on Touchstone Small and Dreyfus Technology 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 Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Dreyfus Technology.
Diversification Opportunities for Touchstone Small and Dreyfus Technology
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Dreyfus is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth 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 Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of Touchstone Small i.e., Touchstone Small and Dreyfus Technology go up and down completely randomly.
Pair Corralation between Touchstone Small and Dreyfus Technology
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 0.59 times more return on investment than Dreyfus Technology. However, Touchstone Small Cap is 1.68 times less risky than Dreyfus Technology. It trades about 0.1 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about -0.01 per unit of risk. If you would invest 3,831 in Touchstone Small Cap on November 6, 2024 and sell it today you would earn a total of 68.00 from holding Touchstone Small Cap or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Dreyfus Technology Growth
Performance |
| Timeline |
| Touchstone Small Cap |
| Dreyfus Technology Growth |
Touchstone Small and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Dreyfus Technology
The main advantage of trading using opposite Touchstone Small and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Dreyfus Technology 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 Dreyfus Technology will offset losses from the drop in Dreyfus Technology's long position.| Touchstone Small vs. Blackrock Science Technology | Touchstone Small vs. Vanguard Information Technology | Touchstone Small vs. Columbia Global Technology | Touchstone Small vs. Goldman Sachs Technology |
| Dreyfus Technology vs. Mesirow Financial Small | Dreyfus Technology vs. Putnam Global Financials | Dreyfus Technology vs. Blackrock Financial Institutions | Dreyfus Technology vs. Vanguard Financials Index |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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