Correlation Between Touchstone Large and Catalyst Exceed
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Catalyst Exceed 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 Large and Catalyst Exceed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Large Cap and Catalyst Exceed Defined, you can compare the effects of market volatilities on Touchstone Large and Catalyst Exceed 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 Large with a short position of Catalyst Exceed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Catalyst Exceed.
Diversification Opportunities for Touchstone Large and Catalyst Exceed
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and CATALYST is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Catalyst Exceed Defined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Exceed Defined and Touchstone 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 Touchstone Large Cap are associated (or correlated) with Catalyst Exceed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Exceed Defined has no effect on the direction of Touchstone Large i.e., Touchstone Large and Catalyst Exceed go up and down completely randomly.
Pair Corralation between Touchstone Large and Catalyst Exceed
Assuming the 90 days horizon Touchstone Large is expected to generate 1.29 times less return on investment than Catalyst Exceed. But when comparing it to its historical volatility, Touchstone Large Cap is 1.22 times less risky than Catalyst Exceed. It trades about 0.18 of its potential returns per unit of risk. Catalyst Exceed Defined is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,217 in Catalyst Exceed Defined on September 7, 2024 and sell it today you would earn a total of 112.00 from holding Catalyst Exceed Defined or generate 9.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Touchstone Large Cap vs. Catalyst Exceed Defined
Performance |
Timeline |
Touchstone Large Cap |
Catalyst Exceed Defined |
Touchstone Large and Catalyst Exceed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Touchstone Large and Catalyst Exceed
The main advantage of trading using opposite Touchstone Large and Catalyst Exceed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Catalyst Exceed 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 Catalyst Exceed will offset losses from the drop in Catalyst Exceed's long position.The idea behind Touchstone Large Cap and Catalyst Exceed Defined 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.Catalyst Exceed vs. Dreyfus Technology Growth | Catalyst Exceed vs. Janus Global Technology | Catalyst Exceed vs. Science Technology Fund | Catalyst Exceed vs. Blackrock Science Technology |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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