Correlation Between Touchstone Small and Franklin Government
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Franklin Government 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 Government 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 Government Money, you can compare the effects of market volatilities on Touchstone Small and Franklin Government 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 Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Franklin Government.
Diversification Opportunities for Touchstone Small and Franklin Government
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Touchstone and Franklin is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money 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 Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of Touchstone Small i.e., Touchstone Small and Franklin Government go up and down completely randomly.
Pair Corralation between Touchstone Small and Franklin Government
If you would invest 3,824 in Touchstone Small Cap on September 3, 2024 and sell it today you would earn a total of 353.00 from holding Touchstone Small Cap or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Franklin Government Money
Performance |
| Timeline |
| Touchstone Small Cap |
| Franklin Government Money |
Touchstone Small and Franklin Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Franklin Government
The main advantage of trading using opposite Touchstone Small and Franklin Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Franklin Government 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 Government will offset losses from the drop in Franklin Government's long position.| Touchstone Small vs. Vanguard Small Cap Value | Touchstone Small vs. Vanguard Small Cap Value | Touchstone Small vs. Us Small Cap | Touchstone Small vs. Us Targeted Value |
| Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard 500 Index | Franklin Government vs. Vanguard Total Stock | Franklin Government vs. Vanguard Total Stock |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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