Correlation Between Touchstone Premium and Emerald Insights

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

Diversification Opportunities for Touchstone Premium and Emerald Insights

0.14

Correlation Coefficient

Touchstone Premium  Emerald Insights

Average diversification

The 3 months correlation between TOUCHSTONE and Emerald is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Premium Yield and Emerald Insights Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Insights 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 Emerald Insights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Insights has no effect on the direction of Touchstone Premium i.e., Touchstone Premium and Emerald Insights go up and down completely randomly.

Pair Corralation between Touchstone Premium and Emerald Insights

Assuming the 90 days horizon Touchstone Premium Yield is expected to generate 0.76 times more return on investment than Emerald Insights. However, Touchstone Premium Yield is 1.31 times less risky than Emerald Insights. It trades about 0.04 of its potential returns per unit of risk. Emerald Insights Fund is currently generating about -0.09 per unit of risk. If you would invest  798.00  in Touchstone Premium Yield on December 28, 2024 and sell it today you would earn a total of  19.00  from holding Touchstone Premium Yield or generate 2.38% return on investment over 90 days.

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

Touchstone Premium Yield  vs.  Emerald Insights Fund

Touchstone Premium Yield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Premium Yield 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 Premium is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emerald Insights

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emerald Insights Fund 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 Touchstone Premium and Emerald Insights

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

The idea behind Touchstone Premium Yield and Emerald Insights Fund 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.