Correlation Between Thompson Largecap and Thompson Bond
Can any of the company-specific risk be diversified away by investing in both Thompson Largecap and Thompson Bond 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 Thompson Largecap and Thompson Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thompson Largecap Fund and Thompson Bond Fund, you can compare the effects of market volatilities on Thompson Largecap and Thompson Bond 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 Thompson Largecap with a short position of Thompson Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thompson Largecap and Thompson Bond.
Diversification Opportunities for Thompson Largecap and Thompson Bond
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thompson and Thompson is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Thompson Largecap Fund and Thompson Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thompson Bond and Thompson Largecap 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 Thompson Largecap Fund are associated (or correlated) with Thompson Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thompson Bond has no effect on the direction of Thompson Largecap i.e., Thompson Largecap and Thompson Bond go up and down completely randomly.
Pair Corralation between Thompson Largecap and Thompson Bond
Assuming the 90 days horizon Thompson Largecap Fund is expected to generate 8.14 times more return on investment than Thompson Bond. However, Thompson Largecap is 8.14 times more volatile than Thompson Bond Fund. It trades about 0.2 of its potential returns per unit of risk. Thompson Bond Fund is currently generating about 0.33 per unit of risk. If you would invest 10,494 in Thompson Largecap Fund on August 31, 2024 and sell it today you would earn a total of 1,093 from holding Thompson Largecap Fund or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thompson Largecap Fund vs. Thompson Bond Fund
Performance |
| Timeline |
| Thompson Largecap |
| Thompson Bond |
Thompson Largecap and Thompson Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thompson Largecap and Thompson Bond
The main advantage of trading using opposite Thompson Largecap and Thompson Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thompson Largecap position performs unexpectedly, Thompson Bond 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 Thompson Bond will offset losses from the drop in Thompson Bond's long position.| Thompson Largecap vs. Clipper Fund Inc | Thompson Largecap vs. Meridian Trarian Fund | Thompson Largecap vs. Meridian Growth Fund | Thompson Largecap vs. Muhlenkamp Fund Institutional |
| Thompson Bond vs. Amg Yacktman Focused | Thompson Bond vs. Fidelity Advisor Floating | Thompson Bond vs. Doubleline Total Return | Thompson Bond vs. Janus Short Term Bond |
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 CEOs Directory module to screen CEOs from public companies around the world.
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