Correlation Between Thornburg Investment and Salient Select

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

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

Diversification Opportunities for Thornburg Investment and Salient Select

0.74

Correlation Coefficient

Thornburg Investment  Salient Select

Poor diversification

The 3 months correlation between Thornburg and Salient is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Investment Income and Salient Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Select Income and Thornburg Investment 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 Investment Income are associated (or correlated) with Salient Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Select Income has no effect on the direction of Thornburg Investment i.e., Thornburg Investment and Salient Select go up and down completely randomly.

Pair Corralation between Thornburg Investment and Salient Select

Assuming the 90 days horizon Thornburg Investment Income is expected to generate 1.29 times more return on investment than Salient Select. However, Thornburg Investment is 1.29 times more volatile than Salient Select Income. It trades about -0.11 of its potential returns per unit of risk. Salient Select Income is currently generating about -0.23 per unit of risk. If you would invest  2,633  in Thornburg Investment Income on September 30, 2024 and sell it today you would lose (72.00) from holding Thornburg Investment Income or give up 2.73% of portfolio value over 90 days.

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

Thornburg Investment Income  vs.  Salient Select Income

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 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.

Salient Select Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salient Select Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Salient Select 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 Investment and Salient Select

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

The idea behind Thornburg Investment Income and Salient Select 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.