Correlation Between Applied Finance and Thornburg Strategic
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Thornburg Strategic 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 Applied Finance and Thornburg Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Thornburg Strategic Income, you can compare the effects of market volatilities on Applied Finance and Thornburg Strategic 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 Applied Finance with a short position of Thornburg Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Thornburg Strategic.
Diversification Opportunities for Applied Finance and Thornburg Strategic
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and Thornburg is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Thornburg Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Strategic and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Thornburg Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Strategic has no effect on the direction of Applied Finance i.e., Applied Finance and Thornburg Strategic go up and down completely randomly.
Pair Corralation between Applied Finance and Thornburg Strategic
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 6.47 times more return on investment than Thornburg Strategic. However, Applied Finance is 6.47 times more volatile than Thornburg Strategic Income. It trades about 0.05 of its potential returns per unit of risk. Thornburg Strategic Income is currently generating about 0.1 per unit of risk. If you would invest 1,731 in Applied Finance Explorer on August 29, 2024 and sell it today you would earn a total of 696.00 from holding Applied Finance Explorer or generate 40.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Thornburg Strategic Income
Performance |
| Timeline |
| Applied Finance Explorer |
| Thornburg Strategic |
Applied Finance and Thornburg Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Thornburg Strategic
The main advantage of trading using opposite Applied Finance and Thornburg Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Thornburg Strategic 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 Thornburg Strategic will offset losses from the drop in Thornburg Strategic's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Thornburg Strategic vs. Mid Cap Value Profund | Thornburg Strategic vs. Applied Finance Explorer | Thornburg Strategic vs. Boston Partners Small | Thornburg Strategic vs. Victory Rs Partners |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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