Correlation Between Touchstone Large and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Old Westbury 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 Large and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Large Cap and Old Westbury Large, you can compare the effects of market volatilities on Touchstone Large and Old Westbury 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 Large with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Old Westbury.
Diversification Opportunities for Touchstone Large and Old Westbury
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Old is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Touchstone Large 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 Large Cap are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Touchstone Large i.e., Touchstone Large and Old Westbury go up and down completely randomly.
Pair Corralation between Touchstone Large and Old Westbury
Assuming the 90 days horizon Touchstone Large Cap is expected to under-perform the Old Westbury. But the mutual fund apears to be less risky and, when comparing its historical volatility, Touchstone Large Cap is 1.31 times less risky than Old Westbury. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Old Westbury Large is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,902 in Old Westbury Large on February 3, 2024 and sell it today you would lose (47.00) from holding Old Westbury Large or give up 2.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Touchstone Large Cap vs. Old Westbury Large
Performance |
Timeline |
Touchstone Large Cap |
Old Westbury Large |
Touchstone Large and Old Westbury Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Touchstone Large and Old Westbury
The main advantage of trading using opposite Touchstone Large and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.Touchstone Large vs. Touchstone Small Cap | Touchstone Large vs. Mid Cap Growth | Touchstone Large vs. Mid Cap Growth | Touchstone Large vs. Sentinel Small Pany |
Old Westbury vs. Old Westbury All | Old Westbury vs. Old Westbury California | Old Westbury vs. Old Westbury Fixed | Old Westbury vs. Old Westbury Municipal |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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