Correlation Between Barings Corporate and Thornburg Income

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

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

Diversification Opportunities for Barings Corporate and Thornburg Income

0.73

Correlation Coefficient

Barings Corporate  Thornburg Income

Poor diversification

The 3 months correlation between Barings and Thornburg is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Barings Corporate Investors 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 Barings Corporate 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 Barings Corporate Investors 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 Barings Corporate i.e., Barings Corporate and Thornburg Income go up and down completely randomly.

Pair Corralation between Barings Corporate and Thornburg Income

Considering the 90-day investment horizon Barings Corporate Investors is expected to generate 3.04 times more return on investment than Thornburg Income. However, Barings Corporate is 3.04 times more volatile than Thornburg Income Builder. It trades about 0.09 of its potential returns per unit of risk. Thornburg Income Builder is currently generating about 0.12 per unit of risk. If you would invest  1,928  in Barings Corporate Investors on November 28, 2024 and sell it today you would earn a total of  185.00  from holding Barings Corporate Investors or generate 9.6% return on investment over 90 days.

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

Barings Corporate Investors  vs.  Thornburg Income Builder

Barings Corporate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Corporate Investors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Barings Corporate may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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 9 (%) 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 Barings Corporate and Thornburg Income

The main advantage of trading using opposite Barings Corporate and Thornburg Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Corporate 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 Barings Corporate Investors 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.