Correlation Between Touchstone Small and Franklin Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Franklin Pennsylvania 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 Franklin Pennsylvania 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 Franklin Pennsylvania Tax Free, you can compare the effects of market volatilities on Touchstone Small and Franklin Pennsylvania 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 Franklin Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Franklin Pennsylvania.
Diversification Opportunities for Touchstone Small and Franklin Pennsylvania
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Touchstone and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Franklin Pennsylvania Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Pennsylvania 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 Franklin Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Pennsylvania has no effect on the direction of Touchstone Small i.e., Touchstone Small and Franklin Pennsylvania go up and down completely randomly.
Pair Corralation between Touchstone Small and Franklin Pennsylvania
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 4.74 times more return on investment than Franklin Pennsylvania. However, Touchstone Small is 4.74 times more volatile than Franklin Pennsylvania Tax Free. It trades about 0.12 of its potential returns per unit of risk. Franklin Pennsylvania Tax Free is currently generating about 0.14 per unit of risk. If you would invest 3,516 in Touchstone Small Cap on September 1, 2024 and sell it today you would earn a total of 661.00 from holding Touchstone Small Cap or generate 18.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Touchstone Small Cap vs. Franklin Pennsylvania Tax Free
Performance |
| Timeline |
| Touchstone Small Cap |
| Franklin Pennsylvania |
Touchstone Small and Franklin Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Franklin Pennsylvania
The main advantage of trading using opposite Touchstone Small and Franklin Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Franklin Pennsylvania 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 Franklin Pennsylvania will offset losses from the drop in Franklin Pennsylvania's long position.| Touchstone Small vs. Cutler Equity | Touchstone Small vs. Scharf Fund Retail | Touchstone Small vs. Huber Capital Equity | Touchstone Small vs. Icon Equity Income |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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