Correlation Between Dow Jones and Thornburg Investment
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Thornburg Investment 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 Thornburg Investment 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 Thornburg Investment Income, you can compare the effects of market volatilities on Dow Jones and Thornburg Investment 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 Thornburg Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Thornburg Investment.
Diversification Opportunities for Dow Jones and Thornburg Investment
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Thornburg is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Thornburg Investment Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Investment 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 Thornburg Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Investment has no effect on the direction of Dow Jones i.e., Dow Jones and Thornburg Investment go up and down completely randomly.
Pair Corralation between Dow Jones and Thornburg Investment
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.4 times more return on investment than Thornburg Investment. However, Dow Jones is 1.4 times more volatile than Thornburg Investment Income. It trades about 0.16 of its potential returns per unit of risk. Thornburg Investment Income is currently generating about 0.04 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Thornburg Investment Income
Performance |
| Timeline |
Dow Jones and Thornburg Investment Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Thornburg Investment Income
Pair trading matchups for Thornburg Investment
Pair Trading with Dow Jones and Thornburg Investment
The main advantage of trading using opposite Dow Jones and Thornburg Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Thornburg Investment 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 Investment will offset losses from the drop in Thornburg Investment's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Thornburg Investment vs. Franklin Income Fund | Thornburg Investment vs. Jpmorgan Income Builder | Thornburg Investment vs. First Eagle Global | Thornburg Investment vs. Ivy Asset Strategy |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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