Correlation Between Touchstone Small and Swan Defined
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Swan Defined 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 Swan Defined 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 Swan Defined Risk, you can compare the effects of market volatilities on Touchstone Small and Swan Defined 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 Swan Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Swan Defined.
Diversification Opportunities for Touchstone Small and Swan Defined
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Touchstone and Swan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Swan Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Defined Risk 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 Swan Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Defined Risk has no effect on the direction of Touchstone Small i.e., Touchstone Small and Swan Defined go up and down completely randomly.
Pair Corralation between Touchstone Small and Swan Defined
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.78 times more return on investment than Swan Defined. However, Touchstone Small is 1.78 times more volatile than Swan Defined Risk. It trades about 0.04 of its potential returns per unit of risk. Swan Defined Risk is currently generating about 0.03 per unit of risk. If you would invest 3,153 in Touchstone Small Cap on September 24, 2024 and sell it today you would earn a total of 687.00 from holding Touchstone Small Cap or generate 21.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Touchstone Small Cap vs. Swan Defined Risk
Performance |
Timeline |
Touchstone Small Cap |
Swan Defined Risk |
Touchstone Small and Swan Defined Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Touchstone Small and Swan Defined
The main advantage of trading using opposite Touchstone Small and Swan Defined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Swan Defined 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 Swan Defined will offset losses from the drop in Swan Defined's long position.Touchstone Small vs. Touchstone Sands Capital | Touchstone Small vs. Mid Cap Growth | Touchstone Small vs. Mid Cap Growth | Touchstone Small vs. Mid Cap Growth |
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Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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