Correlation Between Touchstone Premium and Ab Intermediate

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

By analyzing existing cross correlation between Touchstone Premium Yield and Ab Intermediate Bond, you can compare the effects of market volatilities on Touchstone Premium and Ab Intermediate 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 Premium with a short position of Ab Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Premium and Ab Intermediate.

Diversification Opportunities for Touchstone Premium and Ab Intermediate

0.76

Correlation Coefficient

Touchstone Premium  Ab Intermediate

Poor diversification

The 3 months correlation between Touchstone and ABQZX is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and Ab Intermediate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Intermediate Bond and Touchstone Premium 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 Premium Yield are associated (or correlated) with Ab Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Intermediate Bond has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and Ab Intermediate go up and down completely randomly.

Pair Corralation between Touchstone Premium and Ab Intermediate

Assuming the 90 days horizon Touchstone Premium Yield is expected to generate 2.91 times more return on investment than Ab Intermediate. However, Touchstone Premium is 2.91 times more volatile than Ab Intermediate Bond. It trades about 0.03 of its potential returns per unit of risk. Ab Intermediate Bond is currently generating about 0.07 per unit of risk. If you would invest  729.00  in Touchstone Premium Yield on October 5, 2024 and sell it today you would earn a total of  78.00  from holding Touchstone Premium Yield or generate 10.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.68%
Values	Daily Returns

Touchstone Premium Yield  vs.  Ab Intermediate Bond

Touchstone Premium Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Touchstone Premium Yield 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.

Ab Intermediate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Touchstone Premium and Ab Intermediate

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

The idea behind Touchstone Premium Yield and Ab Intermediate Bond 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.