Correlation Between Touchstone Small and High Yield
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and High Yield 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 High Yield 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 High Yield Fund, you can compare the effects of market volatilities on Touchstone Small and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and High Yield.
Diversification Opportunities for Touchstone Small and High Yield
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and High is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Touchstone Small i.e., Touchstone Small and High Yield go up and down completely randomly.
Pair Corralation between Touchstone Small and High Yield
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 9.39 times more return on investment than High Yield. However, Touchstone Small is 9.39 times more volatile than High Yield Fund. It trades about 0.3 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.27 per unit of risk. If you would invest 3,810 in Touchstone Small Cap on September 1, 2024 and sell it today you would earn a total of 367.00 from holding Touchstone Small Cap or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. High Yield Fund
Performance |
| Timeline |
| Touchstone Small Cap |
| High Yield Fund |
Touchstone Small and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and High Yield
The main advantage of trading using opposite Touchstone Small and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Touchstone Small vs. Cutler Equity | Touchstone Small vs. Scharf Fund Retail | Touchstone Small vs. Huber Capital Equity | Touchstone Small vs. Icon Equity Income |
| High Yield vs. Fidelity Advisor 529 | High Yield vs. Lord Abbett Inflation | High Yield vs. Ab Bond Inflation | High Yield vs. Ab Bond Inflation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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