Correlation Between Touchstone Small and Balter Invenomic

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

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

Diversification Opportunities for Touchstone Small and Balter Invenomic

0.12

Correlation Coefficient

Touchstone Small  Balter Invenomic

Average diversification

The 3 months correlation between Touchstone and Balter is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Balter Invenomic Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balter Invenomic and Touchstone Small 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 Small Cap are associated (or correlated) with Balter Invenomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balter Invenomic has no effect on the direction of Touchstone Small i.e., Touchstone Small and Balter Invenomic go up and down completely randomly.

Pair Corralation between Touchstone Small and Balter Invenomic

Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.59 times more return on investment than Balter Invenomic. However, Touchstone Small is 1.59 times more volatile than Balter Invenomic Fund. It trades about 0.15 of its potential returns per unit of risk. Balter Invenomic Fund is currently generating about 0.06 per unit of risk. If you would invest  3,688  in Touchstone Small Cap on September 12, 2024 and sell it today you would earn a total of  378.00  from holding Touchstone Small Cap or generate 10.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Touchstone Small Cap  vs.  Balter Invenomic Fund

Touchstone Small Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Touchstone Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Balter Invenomic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Balter Invenomic Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balter Invenomic 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 Small and Balter Invenomic

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

The idea behind Touchstone Small Cap and Balter Invenomic 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..