Correlation Between Ohio Tax-free and Touchstone Large

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

By analyzing existing cross correlation between Ohio Tax Free Bond and Touchstone Large Pany, you can compare the effects of market volatilities on Ohio Tax-free and Touchstone Large 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 Ohio Tax-free with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ohio Tax-free and Touchstone Large.

Diversification Opportunities for Ohio Tax-free and Touchstone Large

0.02

Correlation Coefficient

Ohio Tax-free  Touchstone Large

Significant diversification

The 3 months correlation between Ohio and Touchstone is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ohio Tax Free Bond and Touchstone Large Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Pany and Ohio Tax-free 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 Ohio Tax Free Bond are associated (or correlated) with Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Pany has no effect on the direction of Ohio Tax-free i.e., Ohio Tax-free and Touchstone Large go up and down completely randomly.

Pair Corralation between Ohio Tax-free and Touchstone Large

Assuming the 90 days horizon Ohio Tax Free Bond is expected to generate 0.12 times more return on investment than Touchstone Large. However, Ohio Tax Free Bond is 8.63 times less risky than Touchstone Large. It trades about -0.04 of its potential returns per unit of risk. Touchstone Large Pany is currently generating about -0.09 per unit of risk. If you would invest  1,070  in Ohio Tax Free Bond on December 30, 2024 and sell it today you would lose (5.00) from holding Ohio Tax Free Bond or give up 0.47% of portfolio value over 90 days.

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

Ohio Tax Free Bond  vs.  Touchstone Large Pany

Ohio Tax Free

Risk-Adjusted Performance

Very Weak

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

Touchstone Large Pany

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Large Pany 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.

Pair Trading with Ohio Tax-free and Touchstone Large

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

The idea behind Ohio Tax Free Bond and Touchstone Large Pany 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.