Correlation Between Thornburg New and Thornburg Limited
Can any of the company-specific risk be diversified away by investing in both Thornburg New and Thornburg Limited 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 Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg New York and Thornburg Limited Term, you can compare the effects of market volatilities on Thornburg New and Thornburg Limited 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 Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg New and Thornburg Limited.
Diversification Opportunities for Thornburg New and Thornburg Limited
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thornburg and Thornburg is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg New York and Thornburg Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Limited Term 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 York are associated (or correlated) with Thornburg Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Limited Term has no effect on the direction of Thornburg New i.e., Thornburg New and Thornburg Limited go up and down completely randomly.
Pair Corralation between Thornburg New and Thornburg Limited
Assuming the 90 days horizon Thornburg New is expected to generate 1.04 times less return on investment than Thornburg Limited. But when comparing it to its historical volatility, Thornburg New York is 1.65 times less risky than Thornburg Limited. It trades about 0.17 of its potential returns per unit of risk. Thornburg Limited Term is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,107 in Thornburg Limited Term on August 26, 2024 and sell it today you would earn a total of 83.00 from holding Thornburg Limited Term or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg New York vs. Thornburg Limited Term
Performance |
| Timeline |
| Thornburg New York |
| Thornburg Limited Term |
Thornburg New and Thornburg Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg New and Thornburg Limited
The main advantage of trading using opposite Thornburg New and Thornburg Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg New position performs unexpectedly, Thornburg Limited 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 Limited will offset losses from the drop in Thornburg Limited's long position.| Thornburg New vs. Thornburg Value Fund | Thornburg New vs. Thornburg Value Fund | Thornburg New vs. Thornburg International Value | Thornburg New vs. Thornburg International 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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