Correlation Between Touchstone Small and Touchstone Ohio

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

Diversification Opportunities for Touchstone Small and Touchstone Ohio

0.73

Correlation Coefficient

Touchstone Small  Touchstone Ohio

Poor diversification

The 3 months correlation between Touchstone and Touchstone is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Touchstone Ohio Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Ohio Tax 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 Touchstone Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Ohio Tax has no effect on the direction of Touchstone Small i.e., Touchstone Small and Touchstone Ohio go up and down completely randomly.

Pair Corralation between Touchstone Small and Touchstone Ohio

Assuming the 90 days horizon Touchstone Small Cap is expected to under-perform the Touchstone Ohio. In addition to that, Touchstone Small is 4.39 times more volatile than Touchstone Ohio Tax. It trades about -0.17 of its total potential returns per unit of risk. Touchstone Ohio Tax is currently generating about 0.19 per unit of volatility. If you would invest  1,076  in Touchstone Ohio Tax on November 28, 2024 and sell it today you would earn a total of  8.00  from holding Touchstone Ohio Tax or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Touchstone Small Cap  vs.  Touchstone Ohio Tax

Touchstone Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Small Cap 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.

Touchstone Ohio Tax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Ohio Tax has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Touchstone Ohio 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 Touchstone Ohio

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

The idea behind Touchstone Small Cap and Touchstone Ohio Tax 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.