Correlation Between Touchstone Small and Sit Small
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Sit 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 Sit 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 Sit Small Cap, you can compare the effects of market volatilities on Touchstone Small and Sit 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 Sit Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Sit Small.
Diversification Opportunities for Touchstone Small and Sit Small
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Sit is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Sit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit 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 Sit Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Small Cap has no effect on the direction of Touchstone Small i.e., Touchstone Small and Sit Small go up and down completely randomly.
Pair Corralation between Touchstone Small and Sit Small
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 0.87 times more return on investment than Sit Small. However, Touchstone Small Cap is 1.15 times less risky than Sit Small. It trades about 0.09 of its potential returns per unit of risk. Sit Small Cap is currently generating about 0.05 per unit of risk. If you would invest 3,520 in Touchstone Small Cap on November 3, 2024 and sell it today you would earn a total of 426.00 from holding Touchstone Small Cap or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Sit Small Cap
Performance |
| Timeline |
| Touchstone Small Cap |
| Sit Small Cap |
Touchstone Small and Sit Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Sit Small
The main advantage of trading using opposite Touchstone Small and Sit Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Sit 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 Sit Small will offset losses from the drop in Sit Small's long position.| Touchstone Small vs. Hewitt Money Market | Touchstone Small vs. Davis Financial Fund | Touchstone Small vs. Voya Government Money | Touchstone Small vs. Prudential Financial Services |
| Sit Small vs. Pace High Yield | Sit Small vs. Barings High Yield | Sit Small vs. Massmutual Premier High | Sit Small vs. Calamos High Income |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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