Correlation Between Touchstone International and Df Dent

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

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

Diversification Opportunities for Touchstone International and Df Dent

0.86

Correlation Coefficient

Touchstone International  Df Dent

Very poor diversification

The 3 months correlation between Touchstone and DFMLX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and Df Dent Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Df Dent Midcap and Touchstone International 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 International Equity are associated (or correlated) with Df Dent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Df Dent Midcap has no effect on the direction of Touchstone International i.e., Touchstone International and Df Dent go up and down completely randomly.

Pair Corralation between Touchstone International and Df Dent

Assuming the 90 days horizon Touchstone International Equity is expected to generate 0.81 times more return on investment than Df Dent. However, Touchstone International Equity is 1.23 times less risky than Df Dent. It trades about 0.25 of its potential returns per unit of risk. Df Dent Midcap is currently generating about 0.13 per unit of risk. If you would invest  1,667  in Touchstone International Equity on May 18, 2025 and sell it today you would earn a total of  188.00  from holding Touchstone International Equity or generate 11.28% return on investment over 90 days.

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

Touchstone International Equit  vs.  Df Dent Midcap

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 19 (%) 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 September 2025.

Df Dent Midcap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Df Dent Midcap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Df Dent may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Touchstone International and Df Dent

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

The idea behind Touchstone International Equity and Df Dent Midcap 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.