Correlation Between Smallcap Fund and Touchstone International

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

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

Diversification Opportunities for Smallcap Fund and Touchstone International

0.71

Correlation Coefficient

Smallcap Fund  Touchstone International

Poor diversification

The 3 months correlation between Smallcap and Touchstone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Touchstone International Equit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone International and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Touchstone International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone International has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Touchstone International go up and down completely randomly.

Pair Corralation between Smallcap Fund and Touchstone International

Assuming the 90 days horizon Smallcap Fund is expected to generate 1.04 times less return on investment than Touchstone International. In addition to that, Smallcap Fund is 1.45 times more volatile than Touchstone International Equity. It trades about 0.14 of its total potential returns per unit of risk. Touchstone International Equity is currently generating about 0.22 per unit of volatility. If you would invest  1,774  in Touchstone International Equity on July 2, 2025 and sell it today you would earn a total of  163.00  from holding Touchstone International Equity or generate 9.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Smallcap Fund Fka  vs.  Touchstone International Equit

Smallcap Fund Fka

Risk-Adjusted Performance

Good

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

Touchstone International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone International Equity are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Touchstone International may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Smallcap Fund and Touchstone International

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

The idea behind Smallcap Fund Fka and Touchstone International Equity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.