Correlation Between Stifel Financial and Thornburg Income

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

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

Diversification Opportunities for Stifel Financial and Thornburg Income

0.2

Correlation Coefficient

Stifel Financial  Thornburg Income

Modest diversification

The 3 months correlation between Stifel and Thornburg is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial 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 Stifel Financial 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 Stifel Financial 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 Stifel Financial i.e., Stifel Financial and Thornburg Income go up and down completely randomly.

Pair Corralation between Stifel Financial and Thornburg Income

Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 2.22 times more return on investment than Thornburg Income. However, Stifel Financial is 2.22 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 0.09 per unit of risk. If you would invest  5,311  in Stifel Financial on December 2, 2024 and sell it today you would earn a total of  5,308  from holding Stifel Financial or generate 99.94% return on investment over 90 days.

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

Stifel Financial  vs.  Thornburg Income Builder

Stifel Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Stifel Financial and Thornburg Income

The main advantage of trading using opposite Stifel Financial and Thornburg Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial 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 Stifel Financial 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.