Correlation Between Thornburg Value and Rational Strategic

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Can any of the company-specific risk be diversified away by investing in both Thornburg Value and Rational Strategic 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 Value and Rational Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg Value Fund and Rational Strategic Allocation, you can compare the effects of market volatilities on Thornburg Value and Rational Strategic 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 Value with a short position of Rational Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Value and Rational Strategic.

Diversification Opportunities for Thornburg Value and Rational Strategic

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Thornburg and Rational is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Value Fund and Rational Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Strategic and Thornburg Value 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 Value Fund are associated (or correlated) with Rational Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Strategic has no effect on the direction of Thornburg Value i.e., Thornburg Value and Rational Strategic go up and down completely randomly.

Pair Corralation between Thornburg Value and Rational Strategic

Assuming the 90 days horizon Thornburg Value Fund is expected to generate 0.88 times more return on investment than Rational Strategic. However, Thornburg Value Fund is 1.13 times less risky than Rational Strategic. It trades about 0.07 of its potential returns per unit of risk. Rational Strategic Allocation is currently generating about 0.06 per unit of risk. If you would invest  6,185  in Thornburg Value Fund on August 30, 2024 and sell it today you would earn a total of  2,756  from holding Thornburg Value Fund or generate 44.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Thornburg Value Fund  vs.  Rational Strategic Allocation

 Performance 
       Timeline  
Thornburg Value 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Value Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Thornburg Value may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Rational Strategic 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Rational Strategic Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rational Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thornburg Value and Rational Strategic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thornburg Value and Rational Strategic

The main advantage of trading using opposite Thornburg Value and Rational Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Value position performs unexpectedly, Rational Strategic 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 Rational Strategic will offset losses from the drop in Rational Strategic's long position.
The idea behind Thornburg Value Fund and Rational Strategic Allocation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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