Correlation Between Nuveen Mortgage and Thornburg Income

Can any of the company-specific risk be diversified away by investing in both Nuveen Mortgage and Thornburg Income 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 Nuveen Mortgage and Thornburg Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nuveen Mortgage Opportunity and Thornburg Income Builder, you can compare the effects of market volatilities on Nuveen Mortgage and Thornburg Income 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 Nuveen Mortgage with a short position of Thornburg Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Mortgage and Thornburg Income.

Diversification Opportunities for Nuveen Mortgage and Thornburg Income

0.88

Correlation Coefficient

Nuveen Mortgage  Thornburg Income

Very poor diversification

The 3 months correlation between Nuveen and Thornburg is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Mortgage Opportunity and Thornburg Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Income Builder and Nuveen Mortgage 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 Nuveen Mortgage Opportunity are associated (or correlated) with Thornburg Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Income Builder has no effect on the direction of Nuveen Mortgage i.e., Nuveen Mortgage and Thornburg Income go up and down completely randomly.

Pair Corralation between Nuveen Mortgage and Thornburg Income

Considering the 90-day investment horizon Nuveen Mortgage Opportunity is expected to generate 0.89 times more return on investment than Thornburg Income. However, Nuveen Mortgage Opportunity is 1.13 times less risky than Thornburg Income. It trades about 0.11 of its potential returns per unit of risk. Thornburg Income Builder is currently generating about 0.09 per unit of risk. If you would invest  1,323  in Nuveen Mortgage Opportunity on December 2, 2024 and sell it today you would earn a total of  582.00  from holding Nuveen Mortgage Opportunity or generate 43.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Nuveen Mortgage Opportunity  vs.  Thornburg Income Builder

Nuveen Mortgage Oppo

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Mortgage Opportunity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Nuveen Mortgage is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Thornburg Income Builder

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Income Builder are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Thornburg Income is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nuveen Mortgage and Thornburg Income

The main advantage of trading using opposite Nuveen Mortgage and Thornburg Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Mortgage position performs unexpectedly, Thornburg Income 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 Income will offset losses from the drop in Thornburg Income's long position.

The idea behind Nuveen Mortgage Opportunity and Thornburg Income Builder 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.