Correlation Between Touchstone Small and Touchstone International
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Touchstone 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 Touchstone 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 Touchstone International Equity, you can compare the effects of market volatilities on Touchstone Small and Touchstone 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 Touchstone International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Touchstone International.
Diversification Opportunities for Touchstone Small and Touchstone International
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Touchstone and Touchstone is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Touchstone International Equit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone 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 Touchstone International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone International has no effect on the direction of Touchstone Small i.e., Touchstone Small and Touchstone International go up and down completely randomly.
Pair Corralation between Touchstone Small and Touchstone International
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.38 times more return on investment than Touchstone International. However, Touchstone Small is 1.38 times more volatile than Touchstone International Equity. It trades about 0.05 of its potential returns per unit of risk. Touchstone International Equity is currently generating about 0.05 per unit of risk. If you would invest 3,283 in Touchstone Small Cap on August 26, 2024 and sell it today you would earn a total of 854.00 from holding Touchstone Small Cap or generate 26.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Touchstone International Equit
Performance |
| Timeline |
| Touchstone Small Cap |
| Touchstone International |
Touchstone Small and Touchstone International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Touchstone International
The main advantage of trading using opposite Touchstone Small and Touchstone International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Touchstone 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 Touchstone International will offset losses from the drop in Touchstone International's long position.| Touchstone Small vs. Touchstone Sands Capital | Touchstone Small vs. Mid Cap Growth | Touchstone Small vs. Mid Cap Growth | Touchstone Small vs. Mid Cap Growth |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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