Correlation Between Touchstone Small and Voya Index
Can any of the company-specific risk be diversified away by investing in both Touchstone Small and Voya Index 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 Voya Index 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 Voya Index Solution, you can compare the effects of market volatilities on Touchstone Small and Voya Index 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 Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Voya Index.
Diversification Opportunities for Touchstone Small and Voya Index
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Voya is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution 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 Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Solution has no effect on the direction of Touchstone Small i.e., Touchstone Small and Voya Index go up and down completely randomly.
Pair Corralation between Touchstone Small and Voya Index
Assuming the 90 days horizon Touchstone Small Cap is expected to under-perform the Voya Index. In addition to that, Touchstone Small is 1.22 times more volatile than Voya Index Solution. It trades about -0.35 of its total potential returns per unit of risk. Voya Index Solution is currently generating about -0.03 per unit of volatility. If you would invest 1,636 in Voya Index Solution on September 28, 2024 and sell it today you would lose (8.00) from holding Voya Index Solution or give up 0.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Touchstone Small Cap vs. Voya Index Solution
Performance |
Timeline |
Touchstone Small Cap |
Voya Index Solution |
Touchstone Small and Voya Index Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Touchstone Small and Voya Index
The main advantage of trading using opposite Touchstone Small and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small position performs unexpectedly, Voya Index 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 Voya Index will offset losses from the drop in Voya Index's long position.Touchstone Small vs. Foundry Partners Fundamental | Touchstone Small vs. Omni Small Cap Value | Touchstone Small vs. Lord Abbett Small | Touchstone Small vs. Hennessy Nerstone Mid |
Voya Index vs. T Rowe Price | Voya Index vs. Siit High Yield | Voya Index vs. Calvert High Yield | Voya Index vs. Ab Global Risk |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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