Correlation Between Dfa Social and Touchstone Large

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

By analyzing existing cross correlation between Dfa Social Fixed and Touchstone Large Cap, you can compare the effects of market volatilities on Dfa Social and Touchstone Large 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 Dfa Social with a short position of Touchstone Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Social and Touchstone Large.

Diversification Opportunities for Dfa Social and Touchstone Large

-0.66

Correlation Coefficient

Dfa Social  Touchstone Large

Excellent diversification

The 3 months correlation between Dfa and Touchstone is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Social Fixed and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap and Dfa Social 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 Dfa Social Fixed are associated (or correlated) with Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Dfa Social i.e., Dfa Social and Touchstone Large go up and down completely randomly.

Pair Corralation between Dfa Social and Touchstone Large

Assuming the 90 days horizon Dfa Social Fixed is expected to under-perform the Touchstone Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dfa Social Fixed is 2.2 times less risky than Touchstone Large. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Touchstone Large Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,908  in Touchstone Large Cap on September 13, 2024 and sell it today you would earn a total of  59.00  from holding Touchstone Large Cap or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dfa Social Fixed  vs.  Touchstone Large Cap

Dfa Social Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dfa Social Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dfa Social is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Large Cap

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Large Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Touchstone Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dfa Social and Touchstone Large

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

The idea behind Dfa Social Fixed and Touchstone Large Cap 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.