Correlation Between Touchstone Large and Gabelli Dividend

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

Diversification Opportunities for Touchstone Large and Gabelli Dividend

0.89

Correlation Coefficient

Touchstone Large  Gabelli Dividend

Very poor diversification

The 3 months correlation between Touchstone and Gabelli is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Gabelli Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Dividend Income 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 Gabelli Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Dividend Income has no effect on the direction of Touchstone Large i.e., Touchstone Large and Gabelli Dividend go up and down completely randomly.

Pair Corralation between Touchstone Large and Gabelli Dividend

Assuming the 90 days horizon Touchstone Large is expected to generate 1.1 times less return on investment than Gabelli Dividend. In addition to that, Touchstone Large is 1.02 times more volatile than Gabelli Dividend Income. It trades about 0.19 of its total potential returns per unit of risk. Gabelli Dividend Income is currently generating about 0.21 per unit of volatility. If you would invest  2,350  in Gabelli Dividend Income on August 31, 2024 and sell it today you would earn a total of  209.00  from holding Gabelli Dividend Income or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Touchstone Large Cap  vs.  Gabelli Dividend Income

Touchstone Large Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Large Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Touchstone Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Gabelli Dividend Income

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Dividend Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly inconsistent fundamental indicators, Gabelli Dividend may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Touchstone Large and Gabelli Dividend

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

The idea behind Touchstone Large Cap and Gabelli Dividend Income 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.