Correlation Between Thornburg Low and Huber Capital

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

By analyzing existing cross correlation between Thornburg Low Duration and Huber Capital Equity, you can compare the effects of market volatilities on Thornburg Low and Huber Capital 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 Low with a short position of Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Low and Huber Capital.

Diversification Opportunities for Thornburg Low and Huber Capital

0.81

Correlation Coefficient

Thornburg Low  Huber Capital

Very poor diversification

The 3 months correlation between Thornburg and Huber is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Low Duration and Huber Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Equity and Thornburg Low 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 Low Duration are associated (or correlated) with Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Equity has no effect on the direction of Thornburg Low i.e., Thornburg Low and Huber Capital go up and down completely randomly.

Pair Corralation between Thornburg Low and Huber Capital

Assuming the 90 days horizon Thornburg Low is expected to generate 8.64 times less return on investment than Huber Capital. But when comparing it to its historical volatility, Thornburg Low Duration is 16.81 times less risky than Huber Capital. It trades about 0.12 of its potential returns per unit of risk. Huber Capital Equity is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,375  in Huber Capital Equity on September 15, 2024 and sell it today you would earn a total of  23.00  from holding Huber Capital Equity or generate 0.68% return on investment over 90 days.

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

Thornburg Low Duration  vs.  Huber Capital Equity

Thornburg Low Duration

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Low Duration are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thornburg Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Huber Capital Equity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Huber Capital 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 Low and Huber Capital

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

The idea behind Thornburg Low Duration and Huber Capital Equity 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.