Correlation Between Touchstone Small and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Horizon Active 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 Horizon Active 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 Horizon Active Asset, you can compare the effects of market volatilities on Touchstone Small and Horizon Active 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 Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Horizon Active.
Diversification Opportunities for Touchstone Small and Horizon Active
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Horizon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Horizon Active Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Asset 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 Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Asset has no effect on the direction of Touchstone Small i.e., Touchstone Small and Horizon Active go up and down completely randomly.
Pair Corralation between Touchstone Small and Horizon Active
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.32 times more return on investment than Horizon Active. However, Touchstone Small is 1.32 times more volatile than Horizon Active Asset. It trades about 0.13 of its potential returns per unit of risk. Horizon Active Asset is currently generating about 0.07 per unit of risk. If you would invest 3,475 in Touchstone Small Cap on September 2, 2024 and sell it today you would earn a total of 702.00 from holding Touchstone Small Cap or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Horizon Active Asset
Performance |
| Timeline |
| Touchstone Small Cap |
| Horizon Active Asset |
Touchstone Small and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Horizon Active
The main advantage of trading using opposite Touchstone Small and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.| Touchstone Small vs. Wisdomtree Siegel Global | Touchstone Small vs. Kinetics Global Fund | Touchstone Small vs. Rbc Global Opportunities | Touchstone Small vs. Us Global Investors |
| Horizon Active vs. Chartwell Small Cap | Horizon Active vs. Legg Mason Partners | Horizon Active vs. Baird Smallmid Cap | Horizon Active vs. Touchstone Small Cap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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