Correlation Between Thornburg Core and Sequoia Fund

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

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

Diversification Opportunities for Thornburg Core and Sequoia Fund

0.04

Correlation Coefficient

Thornburg Core  Sequoia Fund

Significant diversification

The 3 months correlation between Thornburg and Sequoia is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg E Growth and Sequoia Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia Fund and Thornburg 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 Thornburg E Growth are associated (or correlated) with Sequoia Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Fund has no effect on the direction of Thornburg Core i.e., Thornburg Core and Sequoia Fund go up and down completely randomly.

Pair Corralation between Thornburg Core and Sequoia Fund

Assuming the 90 days horizon Thornburg E Growth is expected to generate 1.33 times more return on investment than Sequoia Fund. However, Thornburg Core is 1.33 times more volatile than Sequoia Fund Inc. It trades about 0.22 of its potential returns per unit of risk. Sequoia Fund Inc is currently generating about 0.26 per unit of risk. If you would invest  3,695  in Thornburg E Growth on October 26, 2024 and sell it today you would earn a total of  147.00  from holding Thornburg E Growth or generate 3.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Thornburg E Growth  vs.  Sequoia Fund Inc

Thornburg E Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg E Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Thornburg Core may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sequoia Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Thornburg Core and Sequoia Fund

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

The idea behind Thornburg E Growth and Sequoia Fund Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.