Correlation Between Touchstone Small and International Equities
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and International Equities 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 International Equities 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 International Equities Index, you can compare the effects of market volatilities on Touchstone Small and International Equities 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 International Equities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and International Equities.
Diversification Opportunities for Touchstone Small and International Equities
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Touchstone and International is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and International Equities Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equities 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 International Equities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equities has no effect on the direction of Touchstone Small i.e., Touchstone Small and International Equities go up and down completely randomly.
Pair Corralation between Touchstone Small and International Equities
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.28 times more return on investment than International Equities. However, Touchstone Small is 1.28 times more volatile than International Equities Index. It trades about 0.08 of its potential returns per unit of risk. International Equities Index is currently generating about 0.04 per unit of risk. If you would invest 3,058 in Touchstone Small Cap on August 31, 2024 and sell it today you would earn a total of 1,111 from holding Touchstone Small Cap or generate 36.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. International Equities Index
Performance |
| Timeline |
| Touchstone Small Cap |
| International Equities |
Touchstone Small and International Equities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and International Equities
The main advantage of trading using opposite Touchstone Small and International Equities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, International Equities 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 International Equities will offset losses from the drop in International Equities' long position.| Touchstone Small vs. Calamos Dynamic Convertible | Touchstone Small vs. Artisan High Income | Touchstone Small vs. Ms Global Fixed | Touchstone Small vs. Inflation Protected Bond Fund |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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