Correlation Between Thornburg and Thornburg New
Can any of the company-specific risk be diversified away by investing in both Thornburg and Thornburg New 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 Thornburg and Thornburg New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg E Growth and Thornburg New Mexico, you can compare the effects of market volatilities on Thornburg and Thornburg New 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 Thornburg with a short position of Thornburg New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg and Thornburg New.
Diversification Opportunities for Thornburg and Thornburg New
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thornburg and Thornburg is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg E Growth and Thornburg New Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg New Mexico and Thornburg 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 Thornburg E Growth are associated (or correlated) with Thornburg New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg New Mexico has no effect on the direction of Thornburg i.e., Thornburg and Thornburg New go up and down completely randomly.
Pair Corralation between Thornburg and Thornburg New
Assuming the 90 days horizon Thornburg E Growth is expected to generate 8.23 times more return on investment than Thornburg New. However, Thornburg is 8.23 times more volatile than Thornburg New Mexico. It trades about 0.13 of its potential returns per unit of risk. Thornburg New Mexico is currently generating about 0.17 per unit of risk. If you would invest 2,541 in Thornburg E Growth on August 26, 2024 and sell it today you would earn a total of 1,222 from holding Thornburg E Growth or generate 48.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg E Growth vs. Thornburg New Mexico
Performance |
| Timeline |
| Thornburg E Growth |
| Thornburg New Mexico |
Thornburg and Thornburg New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg and Thornburg New
The main advantage of trading using opposite Thornburg and Thornburg New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg position performs unexpectedly, Thornburg New 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 New will offset losses from the drop in Thornburg New's long position.| Thornburg vs. Small Cap Stock | Thornburg vs. Qs Global Equity | Thornburg vs. Ab Value Fund | Thornburg vs. Omni Small Cap Value |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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