Correlation Between Touchstone Ultra and Timothy Large/mid-cap

Can any of the company-specific risk be diversified away by investing in both Touchstone Ultra and Timothy Large/mid-cap 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 Ultra and Timothy Large/mid-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Touchstone Ultra Short and Timothy Largemid Cap Value, you can compare the effects of market volatilities on Touchstone Ultra and Timothy Large/mid-cap 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 Ultra with a short position of Timothy Large/mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Ultra and Timothy Large/mid-cap.

Diversification Opportunities for Touchstone Ultra and Timothy Large/mid-cap

-0.07

Correlation Coefficient

Touchstone Ultra  Timothy Large/mid-cap

Good diversification

The 3 months correlation between Touchstone and TIMOTHY is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Ultra Short and Timothy Largemid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Large/mid-cap and Touchstone Ultra 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 Ultra Short are associated (or correlated) with Timothy Large/mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Large/mid-cap has no effect on the direction of Touchstone Ultra i.e., Touchstone Ultra and Timothy Large/mid-cap go up and down completely randomly.

Pair Corralation between Touchstone Ultra and Timothy Large/mid-cap

Assuming the 90 days horizon Touchstone Ultra Short is expected to generate 0.14 times more return on investment than Timothy Large/mid-cap. However, Touchstone Ultra Short is 7.4 times less risky than Timothy Large/mid-cap. It trades about 0.18 of its potential returns per unit of risk. Timothy Largemid Cap Value is currently generating about -0.04 per unit of risk. If you would invest  913.00  in Touchstone Ultra Short on December 23, 2024 and sell it today you would earn a total of  11.00  from holding Touchstone Ultra Short or generate 1.2% return on investment over 90 days.

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

Touchstone Ultra Short  vs.  Timothy Largemid Cap Value

Touchstone Ultra Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Ultra Short are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Touchstone Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Large/mid-cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timothy Largemid Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Timothy Large/mid-cap 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 Ultra and Timothy Large/mid-cap

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

The idea behind Touchstone Ultra Short and Timothy Largemid Cap Value 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.