Correlation Between Touchstone Sands and Shelton Emerging

Can any of the company-specific risk be diversified away by investing in both Touchstone Sands and Shelton Emerging 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 Shelton Emerging 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 Shelton Emerging Markets, you can compare the effects of market volatilities on Touchstone Sands and Shelton Emerging 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 Shelton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Sands and Shelton Emerging.

Diversification Opportunities for Touchstone Sands and Shelton Emerging

0.82

Correlation Coefficient

Touchstone Sands  Shelton Emerging

Very poor diversification

The 3 months correlation between Touchstone and Shelton is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Sands Capital and Shelton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton Emerging Markets 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 Shelton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton Emerging Markets has no effect on the direction of Touchstone Sands i.e., Touchstone Sands and Shelton Emerging go up and down completely randomly.

Pair Corralation between Touchstone Sands and Shelton Emerging

Assuming the 90 days horizon Touchstone Sands is expected to generate 528.0 times less return on investment than Shelton Emerging. In addition to that, Touchstone Sands is 1.16 times more volatile than Shelton Emerging Markets. It trades about 0.0 of its total potential returns per unit of risk. Shelton Emerging Markets is currently generating about 0.14 per unit of volatility. If you would invest  1,649  in Shelton Emerging Markets on November 28, 2024 and sell it today you would earn a total of  103.00  from holding Shelton Emerging Markets or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.31%
Values	Daily Returns

Touchstone Sands Capital  vs.  Shelton Emerging Markets

Touchstone Sands Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Sands Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Touchstone Sands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shelton Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shelton Emerging Markets are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Shelton Emerging may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Touchstone Sands and Shelton Emerging

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

The idea behind Touchstone Sands Capital and Shelton Emerging Markets 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.