Correlation Between Tcw Core and Thompson Bond

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

By analyzing existing cross correlation between Tcw E Fixed and Thompson Bond Fund, you can compare the effects of market volatilities on Tcw Core and Thompson Bond 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 Tcw Core with a short position of Thompson Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tcw Core and Thompson Bond.

Diversification Opportunities for Tcw Core and Thompson Bond

0.94

Correlation Coefficient

Tcw Core  Thompson Bond

Almost no diversification

The 3 months correlation between Tcw and Thompson is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Tcw E Fixed and Thompson Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thompson Bond and Tcw Core 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 Tcw E Fixed are associated (or correlated) with Thompson Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thompson Bond has no effect on the direction of Tcw Core i.e., Tcw Core and Thompson Bond go up and down completely randomly.

Pair Corralation between Tcw Core and Thompson Bond

Assuming the 90 days horizon Tcw E Fixed is expected to generate 2.7 times more return on investment than Thompson Bond. However, Tcw Core is 2.7 times more volatile than Thompson Bond Fund. It trades about 0.13 of its potential returns per unit of risk. Thompson Bond Fund is currently generating about 0.32 per unit of risk. If you would invest  939.00  in Tcw E Fixed on December 26, 2024 and sell it today you would earn a total of  26.00  from holding Tcw E Fixed or generate 2.77% return on investment over 90 days.

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

Tcw E Fixed  vs.  Thompson Bond Fund

Tcw E Fixed

Risk-Adjusted Performance

OK

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

Thompson Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thompson Bond Fund are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thompson Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tcw Core and Thompson Bond

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

The idea behind Tcw E Fixed and Thompson Bond Fund 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.