Correlation Between Large Cap and Touchstone Large

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

By analyzing existing cross correlation between Large Cap Fund and Touchstone Large Pany, you can compare the effects of market volatilities on Large Cap 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 Large Cap with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Touchstone Large.

Diversification Opportunities for Large Cap and Touchstone Large

0.45

Correlation Coefficient

Large Cap  Touchstone Large

Very weak diversification

The 3 months correlation between Large and Touchstone is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Fund and Touchstone Large Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Pany and Large 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 Large Cap Fund 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 Pany has no effect on the direction of Large Cap i.e., Large Cap and Touchstone Large go up and down completely randomly.

Pair Corralation between Large Cap and Touchstone Large

Assuming the 90 days horizon Large Cap Fund is expected to under-perform the Touchstone Large. In addition to that, Large Cap is 1.29 times more volatile than Touchstone Large Pany. It trades about -0.14 of its total potential returns per unit of risk. Touchstone Large Pany is currently generating about 0.02 per unit of volatility. If you would invest  5,889  in Touchstone Large Pany on October 22, 2024 and sell it today you would earn a total of  71.00  from holding Touchstone Large Pany or generate 1.21% return on investment over 90 days.

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

Large Cap Fund  vs.  Touchstone Large Pany

Large Cap Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Large Cap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Touchstone Large Pany

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Large Pany are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Touchstone Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Large Cap and Touchstone Large

The main advantage of trading using opposite Large Cap and Touchstone Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap 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.

The idea behind Large Cap Fund and Touchstone Large Pany 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.