Correlation Between Touchstone Small and Aqr Small
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Aqr Small 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 Aqr Small 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 Aqr Small Cap, you can compare the effects of market volatilities on Touchstone Small and Aqr Small 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 Aqr Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Aqr Small.
Diversification Opportunities for Touchstone Small and Aqr Small
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Aqr is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap 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 Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Touchstone Small i.e., Touchstone Small and Aqr Small go up and down completely randomly.
Pair Corralation between Touchstone Small and Aqr Small
Assuming the 90 days horizon Touchstone Small Cap is expected to under-perform the Aqr Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Touchstone Small Cap is 1.27 times less risky than Aqr Small. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Aqr Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,072 in Aqr Small Cap on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Aqr Small Cap or generate 0.34% 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. Aqr Small Cap
Performance |
| Timeline |
| Touchstone Small Cap |
| Aqr Small Cap |
Touchstone Small and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Aqr Small
The main advantage of trading using opposite Touchstone Small and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Aqr Small 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 Aqr Small will offset losses from the drop in Aqr Small's long position.| Touchstone Small vs. Jhancock Real Estate | Touchstone Small vs. Real Estate Ultrasector | Touchstone Small vs. Short Real Estate | Touchstone Small vs. Pender Real Estate |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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