Correlation Between Vanguard Small-cap and Touchstone Focused
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Touchstone Focused 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-cap and Touchstone Focused 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 Focused Fund, you can compare the effects of market volatilities on Vanguard Small-cap and Touchstone Focused 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-cap with a short position of Touchstone Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Touchstone Focused.
Diversification Opportunities for Vanguard Small-cap and Touchstone Focused
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Touchstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused and Vanguard Small-cap 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 Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Focused has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Touchstone Focused go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Touchstone Focused
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.12 times less return on investment than Touchstone Focused. In addition to that, Vanguard Small-cap is 1.34 times more volatile than Touchstone Focused Fund. It trades about 0.18 of its total potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.28 per unit of volatility. If you would invest 7,399 in Touchstone Focused Fund on November 3, 2024 and sell it today you would earn a total of 337.00 from holding Touchstone Focused Fund or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Touchstone Focused Fund
Performance |
| Timeline |
| Vanguard Small Cap |
| Touchstone Focused |
Vanguard Small-cap and Touchstone Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Touchstone Focused
The main advantage of trading using opposite Vanguard Small-cap and Touchstone Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Touchstone Focused 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 Focused will offset losses from the drop in Touchstone Focused's long position.| Vanguard Small-cap vs. Vanguard Mid Cap Growth | Vanguard Small-cap vs. Vanguard Small Cap Value | Vanguard Small-cap vs. Vanguard Growth Index | Vanguard Small-cap vs. Vanguard Mid Cap Value |
| Touchstone Focused vs. Fidelity Small Cap | Touchstone Focused vs. Lsv Small Cap | Touchstone Focused vs. Fpa Queens Road | Touchstone Focused vs. Vanguard Small Cap Value |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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