Correlation Between Thornburg New and Thornburg Intermediate
Can any of the company-specific risk be diversified away by investing in both Thornburg New and Thornburg Intermediate 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 New and Thornburg Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg New Mexico and Thornburg Intermediate Municipal, you can compare the effects of market volatilities on Thornburg New and Thornburg Intermediate 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 New with a short position of Thornburg Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg New and Thornburg Intermediate.
Diversification Opportunities for Thornburg New and Thornburg Intermediate
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Thornburg and Thornburg is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg New Mexico and Thornburg Intermediate Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Intermediate and Thornburg New 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 New Mexico are associated (or correlated) with Thornburg Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Intermediate has no effect on the direction of Thornburg New i.e., Thornburg New and Thornburg Intermediate go up and down completely randomly.
Pair Corralation between Thornburg New and Thornburg Intermediate
Assuming the 90 days horizon Thornburg New is expected to generate 1.37 times less return on investment than Thornburg Intermediate. But when comparing it to its historical volatility, Thornburg New Mexico is 1.12 times less risky than Thornburg Intermediate. It trades about 0.07 of its potential returns per unit of risk. Thornburg Intermediate Municipal is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,239 in Thornburg Intermediate Municipal on August 26, 2024 and sell it today you would earn a total of 86.00 from holding Thornburg Intermediate Municipal or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg New Mexico vs. Thornburg Intermediate Municip
Performance |
| Timeline |
| Thornburg New Mexico |
| Thornburg Intermediate |
Thornburg New and Thornburg Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg New and Thornburg Intermediate
The main advantage of trading using opposite Thornburg New and Thornburg Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg New position performs unexpectedly, Thornburg Intermediate 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 Intermediate will offset losses from the drop in Thornburg Intermediate's long position.| Thornburg New vs. Ancorathelen Small Mid Cap | Thornburg New vs. The Hartford Small | Thornburg New vs. Ab Small Cap | Thornburg New vs. Touchstone Small Cap |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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