Correlation Between Growth Opportunities and Touchstone Funds

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

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

Diversification Opportunities for Growth Opportunities and Touchstone Funds

0.51

Correlation Coefficient

Growth Opportunities  Touchstone Funds

Very weak diversification

The 3 months correlation between Growth and Touchstone is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Touchstone Funds Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Funds and Growth Opportunities 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 Growth Opportunities Fund are associated (or correlated) with Touchstone Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Funds has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Touchstone Funds go up and down completely randomly.

Pair Corralation between Growth Opportunities and Touchstone Funds

Assuming the 90 days horizon Growth Opportunities Fund is expected to under-perform the Touchstone Funds. In addition to that, Growth Opportunities is 3.9 times more volatile than Touchstone Funds Group. It trades about -0.1 of its total potential returns per unit of risk. Touchstone Funds Group is currently generating about 0.04 per unit of volatility. If you would invest  903.00  in Touchstone Funds Group on November 28, 2024 and sell it today you would earn a total of  6.00  from holding Touchstone Funds Group or generate 0.66% return on investment over 90 days.

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

Growth Opportunities Fund  vs.  Touchstone Funds Group

Growth Opportunities

Risk-Adjusted Performance

Very Weak

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

Touchstone Funds

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Funds Group are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Touchstone Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Growth Opportunities and Touchstone Funds

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

The idea behind Growth Opportunities Fund and Touchstone Funds Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.