Correlation Between Vanguard 500 and Touchstone Large
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Touchstone Large 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 500 and Touchstone Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Touchstone Large Cap, you can compare the effects of market volatilities on Vanguard 500 and Touchstone Large 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 500 with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Touchstone Large.
Diversification Opportunities for Vanguard 500 and Touchstone Large
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Touchstone is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap and Vanguard 500 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 500 Index are associated (or correlated) with Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Touchstone Large go up and down completely randomly.
Pair Corralation between Vanguard 500 and Touchstone Large
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 1.2 times more return on investment than Touchstone Large. However, Vanguard 500 is 1.2 times more volatile than Touchstone Large Cap. It trades about 0.17 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.15 per unit of risk. If you would invest 39,765 in Vanguard 500 Index on September 1, 2024 and sell it today you would earn a total of 15,698 from holding Vanguard 500 Index or generate 39.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Touchstone Large Cap
Performance |
| Timeline |
| Vanguard 500 Index |
| Touchstone Large Cap |
Vanguard 500 and Touchstone Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Touchstone Large
The main advantage of trading using opposite Vanguard 500 and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Touchstone Large 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 Large will offset losses from the drop in Touchstone Large's long position.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
| Touchstone Large vs. Touchstone Small Cap | Touchstone Large vs. Mid Cap Growth | Touchstone Large vs. Mid Cap Growth | Touchstone Large 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |