Correlation Between Capital Income and Thornburg Investment
Can any of the company-specific risk be diversified away by investing in both Capital Income 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 Capital Income and Thornburg Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Thornburg Investment Income, you can compare the effects of market volatilities on Capital Income 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 Capital Income with a short position of Thornburg Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Thornburg Investment.
Diversification Opportunities for Capital Income and Thornburg Investment
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Thornburg is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Thornburg Investment Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Investment and Capital Income 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 Capital Income Builder 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 Capital Income i.e., Capital Income and Thornburg Investment go up and down completely randomly.
Pair Corralation between Capital Income and Thornburg Investment
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.91 times more return on investment than Thornburg Investment. However, Capital Income Builder is 1.09 times less risky than Thornburg Investment. It trades about 0.12 of its potential returns per unit of risk. Thornburg Investment Income is currently generating about 0.09 per unit of risk. If you would invest 6,605 in Capital Income Builder on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Capital Income Builder or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Thornburg Investment Income
Performance |
| Timeline |
| Capital Income Builder |
| Thornburg Investment |
Capital Income and Thornburg Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Thornburg Investment
The main advantage of trading using opposite Capital Income and Thornburg Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income 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.| Capital Income vs. Absolute Convertible Arbitrage | Capital Income vs. Lord Abbett Convertible | Capital Income vs. Harbor Vertible Securities | Capital Income vs. Virtus Convertible |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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