Correlation Between Guidemark Large and Touchstone Sands

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

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

Diversification Opportunities for Guidemark Large and Touchstone Sands

-0.34

Correlation Coefficient

Guidemark Large  Touchstone Sands

Very good diversification

The 3 months correlation between Guidemark and Touchstone is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital and Guidemark Large 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 Guidemark Large Cap are associated (or correlated) with Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Guidemark Large i.e., Guidemark Large and Touchstone Sands go up and down completely randomly.

Pair Corralation between Guidemark Large and Touchstone Sands

Assuming the 90 days horizon Guidemark Large is expected to generate 3.47 times less return on investment than Touchstone Sands. But when comparing it to its historical volatility, Guidemark Large Cap is 1.59 times less risky than Touchstone Sands. It trades about 0.04 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,274  in Touchstone Sands Capital on October 4, 2024 and sell it today you would earn a total of  532.00  from holding Touchstone Sands Capital or generate 41.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Guidemark Large Cap  vs.  Touchstone Sands Capital

Guidemark Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Touchstone Sands Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Sands Capital are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Touchstone Sands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guidemark Large and Touchstone Sands

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

The idea behind Guidemark Large Cap and Touchstone Sands Capital 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.