Correlation Between Touchstone Small and Steward International
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Steward International 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 Steward International 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 Steward International Enhanced, you can compare the effects of market volatilities on Touchstone Small and Steward International 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 Steward International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Steward International.
Diversification Opportunities for Touchstone Small and Steward International
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Touchstone and Steward is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Steward International Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward International 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 Steward International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward International has no effect on the direction of Touchstone Small i.e., Touchstone Small and Steward International go up and down completely randomly.
Pair Corralation between Touchstone Small and Steward International
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.21 times more return on investment than Steward International. However, Touchstone Small is 1.21 times more volatile than Steward International Enhanced. It trades about 0.13 of its potential returns per unit of risk. Steward International Enhanced is currently generating about 0.02 per unit of risk. If you would invest 3,473 in Touchstone Small Cap on September 5, 2024 and sell it today you would earn a total of 682.00 from holding Touchstone Small Cap or generate 19.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Touchstone Small Cap vs. Steward International Enhanced
Performance |
| Timeline |
| Touchstone Small Cap |
| Steward International |
Touchstone Small and Steward International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Steward International
The main advantage of trading using opposite Touchstone Small and Steward International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Steward International 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 Steward International will offset losses from the drop in Steward International's long position.| Touchstone Small vs. Heartland Value Plus | Touchstone Small vs. Queens Road Small | Touchstone Small vs. Hennessy Nerstone Mid | Touchstone Small vs. Amg River Road |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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