Correlation Between Vanguard Small and Touchstone Strategic
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Touchstone Strategic 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 Vanguard Small and Touchstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Touchstone Strategic Income, you can compare the effects of market volatilities on Vanguard Small and Touchstone Strategic 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 Vanguard Small with a short position of Touchstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Touchstone Strategic.
Diversification Opportunities for Vanguard Small and Touchstone Strategic
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Touchstone is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Touchstone Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Strategic and Vanguard 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 Vanguard Small Cap Growth are associated (or correlated) with Touchstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Strategic has no effect on the direction of Vanguard Small i.e., Vanguard Small and Touchstone Strategic go up and down completely randomly.
Pair Corralation between Vanguard Small and Touchstone Strategic
Considering the 90-day investment horizon Vanguard Small Cap Growth is expected to generate 4.49 times more return on investment than Touchstone Strategic. However, Vanguard Small is 4.49 times more volatile than Touchstone Strategic Income. It trades about 0.47 of its potential returns per unit of risk. Touchstone Strategic Income is currently generating about 0.17 per unit of risk. If you would invest 26,684 in Vanguard Small Cap Growth on September 1, 2024 and sell it today you would earn a total of 3,483 from holding Vanguard Small Cap Growth or generate 13.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Touchstone Strategic Income
Performance |
| Timeline |
| Vanguard Small Cap |
| Touchstone Strategic |
Vanguard Small and Touchstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Touchstone Strategic
The main advantage of trading using opposite Vanguard Small and Touchstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Touchstone Strategic 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 Strategic will offset losses from the drop in Touchstone Strategic's long position.| Vanguard Small vs. Vanguard Mid Cap Growth | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard Mid Cap Value | Vanguard Small vs. Vanguard Growth Index |
| Touchstone Strategic vs. BlackRock High Yield | Touchstone Strategic vs. Hartford Short Duration | Touchstone Strategic vs. SSGA Active Trust | Touchstone Strategic vs. Aquagold International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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