Correlation Between Touchstone Small and Oakmark Select
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Oakmark Select 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 Oakmark Select 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 Oakmark Select, you can compare the effects of market volatilities on Touchstone Small and Oakmark Select 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 Oakmark Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Oakmark Select.
Diversification Opportunities for Touchstone Small and Oakmark Select
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Oakmark is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Oakmark Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Select 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 Oakmark Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Select has no effect on the direction of Touchstone Small i.e., Touchstone Small and Oakmark Select go up and down completely randomly.
Pair Corralation between Touchstone Small and Oakmark Select
Assuming the 90 days horizon Touchstone Small Cap is expected to under-perform the Oakmark Select. In addition to that, Touchstone Small is 1.2 times more volatile than Oakmark Select. It trades about -0.09 of its total potential returns per unit of risk. Oakmark Select is currently generating about 0.0 per unit of volatility. If you would invest 8,347 in Oakmark Select on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Oakmark Select or generate 0.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Touchstone Small Cap vs. Oakmark Select
Performance |
| Timeline |
| Touchstone Small Cap |
| Oakmark Select |
Touchstone Small and Oakmark Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Oakmark Select
The main advantage of trading using opposite Touchstone Small and Oakmark Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Oakmark Select 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 Oakmark Select will offset losses from the drop in Oakmark Select's long position.| Touchstone Small vs. Smallcap Growth Fund | Touchstone Small vs. Mutual Of America | Touchstone Small vs. Aqr Small Cap | Touchstone Small vs. Scout Small Cap |
| Oakmark Select vs. Transamerica Financial Life | Oakmark Select vs. Davis Financial Fund | Oakmark Select vs. Financials Ultrasector Profund | Oakmark Select vs. Vanguard Financials Index |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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