Correlation Between Lsv Small and Thornburg Core

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

By analyzing existing cross correlation between Lsv Small Cap and Thornburg E Growth, you can compare the effects of market volatilities on Lsv Small 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 Lsv Small with a short position of Thornburg Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Small and Thornburg Core.

Diversification Opportunities for Lsv Small and Thornburg Core

0.38

Correlation Coefficient

Lsv Small  Thornburg Core

Weak diversification

The 3 months correlation between Lsv and Thornburg is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap 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 Lsv Small 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 Lsv Small Cap 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 Lsv Small i.e., Lsv Small and Thornburg Core go up and down completely randomly.

Pair Corralation between Lsv Small and Thornburg Core

Assuming the 90 days horizon Lsv Small Cap is expected to generate 0.55 times more return on investment than Thornburg Core. However, Lsv Small Cap is 1.83 times less risky than Thornburg Core. It trades about -0.24 of its potential returns per unit of risk. Thornburg E Growth is currently generating about -0.31 per unit of risk. If you would invest  1,899  in Lsv Small Cap on December 20, 2024 and sell it today you would lose (111.00) from holding Lsv Small Cap or give up 5.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lsv Small Cap  vs.  Thornburg E Growth

Lsv Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsv Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Thornburg E Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thornburg E Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Lsv Small and Thornburg Core

The main advantage of trading using opposite Lsv Small and Thornburg Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsv Small 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.

The idea behind Lsv Small Cap and Thornburg E Growth 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..