Correlation Between Touchstone Small and Jensen Quality
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Jensen Quality 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 Jensen Quality 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 Jensen Quality Value, you can compare the effects of market volatilities on Touchstone Small and Jensen Quality 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 Jensen Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Jensen Quality.
Diversification Opportunities for Touchstone Small and Jensen Quality
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Touchstone and Jensen is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Jensen Quality Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Quality Value 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 Jensen Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Quality Value has no effect on the direction of Touchstone Small i.e., Touchstone Small and Jensen Quality go up and down completely randomly.
Pair Corralation between Touchstone Small and Jensen Quality
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.13 times more return on investment than Jensen Quality. However, Touchstone Small is 1.13 times more volatile than Jensen Quality Value. It trades about 0.05 of its potential returns per unit of risk. Jensen Quality Value is currently generating about -0.06 per unit of risk. If you would invest 3,851 in Touchstone Small Cap on October 26, 2024 and sell it today you would earn a total of 116.00 from holding Touchstone Small Cap or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Jensen Quality Value
Performance |
| Timeline |
| Touchstone Small Cap |
| Jensen Quality Value |
Touchstone Small and Jensen Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Jensen Quality
The main advantage of trading using opposite Touchstone Small and Jensen Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Jensen Quality 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 Jensen Quality will offset losses from the drop in Jensen Quality's long position.| Touchstone Small vs. Artisan High Income | Touchstone Small vs. Victory High Yield | Touchstone Small vs. Voya High Yield | Touchstone Small vs. City National Rochdale |
| Jensen Quality vs. Touchstone Small Cap | Jensen Quality vs. Franklin Small Cap | Jensen Quality vs. Kinetics Small Cap | Jensen Quality vs. Goldman Sachs Smallmid |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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