Correlation Between Touchstone Small and Ashmore Emerging
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Ashmore Emerging 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 Ashmore Emerging 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 Ashmore Emerging Markets, you can compare the effects of market volatilities on Touchstone Small and Ashmore Emerging 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 Ashmore Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Ashmore Emerging.
Diversification Opportunities for Touchstone Small and Ashmore Emerging
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Touchstone and Ashmore is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets 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 Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Touchstone Small i.e., Touchstone Small and Ashmore Emerging go up and down completely randomly.
Pair Corralation between Touchstone Small and Ashmore Emerging
Assuming the 90 days horizon Touchstone Small Cap is expected to under-perform the Ashmore Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Touchstone Small Cap is 1.17 times less risky than Ashmore Emerging. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Ashmore Emerging Markets is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 833.00 in Ashmore Emerging Markets on September 12, 2024 and sell it today you would lose (7.00) from holding Ashmore Emerging Markets or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Ashmore Emerging Markets
Performance |
| Timeline |
| Touchstone Small Cap |
| Ashmore Emerging Markets |
Touchstone Small and Ashmore Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Ashmore Emerging
The main advantage of trading using opposite Touchstone Small and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Ashmore Emerging 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.| Touchstone Small vs. Smallcap Growth Fund | Touchstone Small vs. Mutual Of America | Touchstone Small vs. Aqr Small Cap | Touchstone Small vs. Scout Small Cap |
| Ashmore Emerging vs. Aig Government Money | Ashmore Emerging vs. Schwab Government Money | Ashmore Emerging vs. Ridgeworth Seix Government | Ashmore Emerging vs. Inverse Government Long |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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