Correlation Between Thornburg Limited and Nuveen High

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

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

Diversification Opportunities for Thornburg Limited and Nuveen High

0.86

Correlation Coefficient

Thornburg Limited  Nuveen High

Very poor diversification

The 3 months correlation between Thornburg and Nuveen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Limited Term and Nuveen High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen High Yield and Thornburg Limited 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 Limited Term are associated (or correlated) with Nuveen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Yield has no effect on the direction of Thornburg Limited i.e., Thornburg Limited and Nuveen High go up and down completely randomly.

Pair Corralation between Thornburg Limited and Nuveen High

Assuming the 90 days horizon Thornburg Limited Term is expected to generate 0.36 times more return on investment than Nuveen High. However, Thornburg Limited Term is 2.8 times less risky than Nuveen High. It trades about 0.13 of its potential returns per unit of risk. Nuveen High Yield is currently generating about -0.04 per unit of risk. If you would invest  1,333  in Thornburg Limited Term on December 27, 2024 and sell it today you would earn a total of  13.00  from holding Thornburg Limited Term or generate 0.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Thornburg Limited Term  vs.  Nuveen High Yield

Thornburg Limited Term

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Limited Term are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thornburg Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen High Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thornburg Limited and Nuveen High

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

The idea behind Thornburg Limited Term and Nuveen High Yield 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.