Correlation Between Touchstone Small and The Hartford
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and The Hartford 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 The Hartford 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 The Hartford Small, you can compare the effects of market volatilities on Touchstone Small and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and The Hartford.
Diversification Opportunities for Touchstone Small and The Hartford
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and THE is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Touchstone Small i.e., Touchstone Small and The Hartford go up and down completely randomly.
Pair Corralation between Touchstone Small and The Hartford
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.03 times more return on investment than The Hartford. However, Touchstone Small is 1.03 times more volatile than The Hartford Small. It trades about 0.25 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.24 per unit of risk. If you would invest 3,873 in Touchstone Small Cap on August 28, 2024 and sell it today you would earn a total of 321.00 from holding Touchstone Small Cap or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. The Hartford Small
Performance |
| Timeline |
| Touchstone Small Cap |
| Hartford Small |
Touchstone Small and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and The Hartford
The main advantage of trading using opposite Touchstone Small and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Touchstone Small vs. Legg Mason Bw | Touchstone Small vs. Old Westbury Large | Touchstone Small vs. Rational Strategic Allocation | Touchstone Small vs. Goldman Sachs Large |
| The Hartford vs. Mesirow Financial Small | The Hartford vs. Fidelity Advisor Financial | The Hartford vs. Gabelli Global Financial | The Hartford vs. Prudential Jennison Financial |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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