Correlation Between Touchstone Small and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Growth Opportunities 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 Growth Opportunities 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 Growth Opportunities Fund, you can compare the effects of market volatilities on Touchstone Small and Growth Opportunities 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 Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Growth Opportunities.
Diversification Opportunities for Touchstone Small and Growth Opportunities
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Growth is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities 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 Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Touchstone Small i.e., Touchstone Small and Growth Opportunities go up and down completely randomly.
Pair Corralation between Touchstone Small and Growth Opportunities
Assuming the 90 days horizon Touchstone Small is expected to generate 2.23 times less return on investment than Growth Opportunities. In addition to that, Touchstone Small is 1.05 times more volatile than Growth Opportunities Fund. It trades about 0.05 of its total potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.13 per unit of volatility. If you would invest 3,187 in Growth Opportunities Fund on August 28, 2024 and sell it today you would earn a total of 2,624 from holding Growth Opportunities Fund or generate 82.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Growth Opportunities Fund
Performance |
| Timeline |
| Touchstone Small Cap |
| Growth Opportunities |
Touchstone Small and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Growth Opportunities
The main advantage of trading using opposite Touchstone Small and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Touchstone Small vs. Pioneer High Yield | Touchstone Small vs. Prudential High Yield | Touchstone Small vs. Pia High Yield | Touchstone Small vs. Dunham High Yield |
| Growth Opportunities vs. Large Cap Fund | Growth Opportunities vs. Nicholas Ii Inc | Growth Opportunities vs. Mid Cap Value | Growth Opportunities vs. Tcw Relative Value |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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