Correlation Between Thornburg Global and Thornburg Investment

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

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

Diversification Opportunities for Thornburg Global and Thornburg Investment

0.95

Correlation Coefficient

Thornburg Global  Thornburg Investment

Almost no diversification

The 3 months correlation between Thornburg and Thornburg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Global Opportunities and Thornburg Investment Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Investment and Thornburg Global 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 Global Opportunities 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 Thornburg Global i.e., Thornburg Global and Thornburg Investment go up and down completely randomly.

Pair Corralation between Thornburg Global and Thornburg Investment

Assuming the 90 days horizon Thornburg Global is expected to generate 1.03 times less return on investment than Thornburg Investment. In addition to that, Thornburg Global is 1.56 times more volatile than Thornburg Investment Income. It trades about 0.16 of its total potential returns per unit of risk. Thornburg Investment Income is currently generating about 0.25 per unit of volatility. If you would invest  2,574  in Thornburg Investment Income on December 30, 2024 and sell it today you would earn a total of  210.00  from holding Thornburg Investment Income or generate 8.16% return on investment over 90 days.

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

Thornburg Global Opportunities  vs.  Thornburg Investment Income

Thornburg Global Opp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Global Opportunities are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Thornburg Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Thornburg Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Investment Income are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Thornburg Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Thornburg Global and Thornburg Investment

The main advantage of trading using opposite Thornburg Global and Thornburg Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Global 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 Thornburg Global Opportunities 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.