Correlation Between Dow Jones and Touchstone Premium
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Touchstone Premium 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 Dow Jones and Touchstone Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Touchstone Premium Yield, you can compare the effects of market volatilities on Dow Jones and Touchstone Premium 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 Dow Jones with a short position of Touchstone Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Touchstone Premium.
Diversification Opportunities for Dow Jones and Touchstone Premium
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Touchstone is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Touchstone Premium Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Premium Yield and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Touchstone Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Premium Yield has no effect on the direction of Dow Jones i.e., Dow Jones and Touchstone Premium go up and down completely randomly.
Pair Corralation between Dow Jones and Touchstone Premium
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.76 times more return on investment than Touchstone Premium. However, Dow Jones Industrial is 1.32 times less risky than Touchstone Premium. It trades about 0.18 of its potential returns per unit of risk. Touchstone Premium Yield is currently generating about 0.01 per unit of risk. If you would invest 4,234,365 in Dow Jones Industrial on May 27, 2025 and sell it today you would earn a total of 328,809 from holding Dow Jones Industrial or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Touchstone Premium Yield
Performance |
| Timeline |
Dow Jones and Touchstone Premium Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Touchstone Premium Yield
Pair trading matchups for Touchstone Premium
Pair Trading with Dow Jones and Touchstone Premium
The main advantage of trading using opposite Dow Jones and Touchstone Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Touchstone Premium 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 Premium will offset losses from the drop in Touchstone Premium's long position.| Dow Jones vs. Air Products and | Dow Jones vs. CVR Partners LP | Dow Jones vs. Park Electrochemical | Dow Jones vs. Sealed Air |
| Touchstone Premium vs. Maryland Short Term Tax Free | Touchstone Premium vs. The Short Term Municipal | Touchstone Premium vs. Massmutual Premier Short Duration | Touchstone Premium vs. Nuveen Short Term |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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