Correlation Between Touchstone Sands and Hotchkis Wiley

Can any of the company-specific risk be diversified away by investing in both Touchstone Sands and Hotchkis Wiley 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 Sands and Hotchkis Wiley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Touchstone Sands Capital and Hotchkis Wiley Diversified, you can compare the effects of market volatilities on Touchstone Sands and Hotchkis Wiley 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 Sands with a short position of Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Sands and Hotchkis Wiley.

Diversification Opportunities for Touchstone Sands and Hotchkis Wiley

0.93

Correlation Coefficient

Touchstone Sands  Hotchkis Wiley

Almost no diversification

The 3 months correlation between Touchstone and Hotchkis is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Sands Capital and Hotchkis Wiley Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Diver and Touchstone Sands 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 Sands Capital are associated (or correlated) with Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Diver has no effect on the direction of Touchstone Sands i.e., Touchstone Sands and Hotchkis Wiley go up and down completely randomly.

Pair Corralation between Touchstone Sands and Hotchkis Wiley

Assuming the 90 days horizon Touchstone Sands Capital is expected to generate 1.39 times more return on investment than Hotchkis Wiley. However, Touchstone Sands is 1.39 times more volatile than Hotchkis Wiley Diversified. It trades about 0.27 of its potential returns per unit of risk. Hotchkis Wiley Diversified is currently generating about 0.12 per unit of risk. If you would invest  1,556  in Touchstone Sands Capital on September 5, 2024 and sell it today you would earn a total of  324.00  from holding Touchstone Sands Capital or generate 20.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Touchstone Sands Capital  vs.  Hotchkis Wiley Diversified

Touchstone Sands Capital

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Sands Capital are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Touchstone Sands showed solid returns over the last few months and may actually be approaching a breakup point.

Hotchkis Wiley Diver

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hotchkis Wiley Diversified are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Hotchkis Wiley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Touchstone Sands and Hotchkis Wiley

The main advantage of trading using opposite Touchstone Sands and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Sands position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley's long position.

The idea behind Touchstone Sands Capital and Hotchkis Wiley Diversified pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.