Correlation Between Touchstone Small and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Vanguard Small-cap 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 Vanguard Small-cap 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 Vanguard Small Cap Index, you can compare the effects of market volatilities on Touchstone Small and Vanguard Small-cap 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 Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Vanguard Small-cap.
Diversification Opportunities for Touchstone Small and Vanguard Small-cap
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and VANGUARD is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 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 Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Touchstone Small i.e., Touchstone Small and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Touchstone Small and Vanguard Small-cap
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.25 times more return on investment than Vanguard Small-cap. However, Touchstone Small is 1.25 times more volatile than Vanguard Small Cap Index. It trades about 0.18 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.21 per unit of risk. If you would invest 3,845 in Touchstone Small Cap on August 24, 2024 and sell it today you would earn a total of 229.00 from holding Touchstone Small Cap or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Touchstone Small Cap vs. Vanguard Small Cap Index
Performance |
| Timeline |
| Touchstone Small Cap |
| Vanguard Small Cap |
Touchstone Small and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Vanguard Small-cap
The main advantage of trading using opposite Touchstone Small and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Vanguard Small-cap 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 Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap's long position.| Touchstone Small vs. Us Global Investors | Touchstone Small vs. T Rowe Price | Touchstone Small vs. Nuveen Global Real | Touchstone Small vs. The Hartford Global |
| Vanguard Small-cap vs. Vanguard Small Cap Index | Vanguard Small-cap vs. Vanguard Small Cap Index | Vanguard Small-cap vs. Vanguard Small Cap Index | Vanguard Small-cap vs. Fidelity Small Cap |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |