Correlation Between Touchstone Sands and Large Cap

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

By analyzing existing cross correlation between Touchstone Sands Capital and Large Cap Fund, you can compare the effects of market volatilities on Touchstone Sands and Large 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 Sands with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Sands and Large Cap.

Diversification Opportunities for Touchstone Sands and Large Cap

0.0

Correlation Coefficient

Touchstone Sands  Large Cap

Pay attention - limited upside

The 3 months correlation between Touchstone and Large is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Sands Capital and Large Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Fund and Touchstone Sands 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 Sands Capital are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Fund has no effect on the direction of Touchstone Sands i.e., Touchstone Sands and Large Cap go up and down completely randomly.

Pair Corralation between Touchstone Sands and Large Cap

Assuming the 90 days horizon Touchstone Sands Capital is expected to generate 1.22 times more return on investment than Large Cap. However, Touchstone Sands is 1.22 times more volatile than Large Cap Fund. It trades about 0.11 of its potential returns per unit of risk. Large Cap Fund is currently generating about 0.0 per unit of risk. If you would invest  1,056  in Touchstone Sands Capital on October 5, 2024 and sell it today you would earn a total of  572.00  from holding Touchstone Sands Capital or generate 54.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Touchstone Sands Capital  vs.  Large Cap Fund

Touchstone Sands Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Sands Capital are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Touchstone Sands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Large Cap Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Large Cap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Touchstone Sands and Large Cap

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

The idea behind Touchstone Sands Capital and Large Cap 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.