Correlation Between T Rowe and Thornburg Investment

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

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

Diversification Opportunities for T Rowe and Thornburg Investment

0.22

Correlation Coefficient

T Rowe  Thornburg Investment

Modest diversification

The 3 months correlation between RRTNX and Thornburg is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Thornburg Investment Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Investment and T Rowe 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 T Rowe Price are associated (or correlated) with Thornburg Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Investment has no effect on the direction of T Rowe i.e., T Rowe and Thornburg Investment go up and down completely randomly.

Pair Corralation between T Rowe and Thornburg Investment

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Thornburg Investment. But the mutual fund apears to be less risky and, when comparing its historical volatility, T Rowe Price is 1.23 times less risky than Thornburg Investment. The mutual fund trades about -0.38 of its potential returns per unit of risk. The Thornburg Investment Income is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,571  in Thornburg Investment Income on October 12, 2024 and sell it today you would earn a total of  13.00  from holding Thornburg Investment Income or generate 0.51% return on investment over 90 days.

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

T Rowe Price  vs.  Thornburg Investment Income

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thornburg Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with T Rowe and Thornburg Investment

The main advantage of trading using opposite T Rowe and Thornburg Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Thornburg Investment 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 Investment will offset losses from the drop in Thornburg Investment's long position.

The idea behind T Rowe Price and Thornburg Investment Income 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.