Correlation Between California Bond and Thornburg Core
Can any of the company-specific risk be diversified away by investing in both California Bond and Thornburg Core 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 California Bond and Thornburg Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Thornburg E Growth, you can compare the effects of market volatilities on California Bond and Thornburg Core 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 California Bond with a short position of Thornburg Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Thornburg Core.
Diversification Opportunities for California Bond and Thornburg Core
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Thornburg is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Thornburg E Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg E Growth and California Bond 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 California Bond Fund are associated (or correlated) with Thornburg Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg E Growth has no effect on the direction of California Bond i.e., California Bond and Thornburg Core go up and down completely randomly.
Pair Corralation between California Bond and Thornburg Core
Assuming the 90 days horizon California Bond is expected to generate 7.36 times less return on investment than Thornburg Core. But when comparing it to its historical volatility, California Bond Fund is 4.32 times less risky than Thornburg Core. It trades about 0.18 of its potential returns per unit of risk. Thornburg E Growth is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,001 in Thornburg E Growth on September 3, 2024 and sell it today you would earn a total of 283.00 from holding Thornburg E Growth or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Thornburg E Growth
Performance |
| Timeline |
| California Bond |
| Thornburg E Growth |
California Bond and Thornburg Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Thornburg Core
The main advantage of trading using opposite California Bond and Thornburg Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Thornburg Core 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 Core will offset losses from the drop in Thornburg Core's long position.| California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free |
| Thornburg Core vs. T Rowe Price | Thornburg Core vs. T Rowe Price | Thornburg Core vs. T Rowe Price | Thornburg Core vs. T Rowe Price |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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