Correlation Between Thornburg Value and Perkins Mid

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

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

Diversification Opportunities for Thornburg Value and Perkins Mid

0.76

Correlation Coefficient

Thornburg Value  Perkins Mid

Poor diversification

The 3 months correlation between Thornburg and Perkins is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Value Fund and Perkins Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Mid Cap and Thornburg Value 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 Value Fund are associated (or correlated) with Perkins Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Mid Cap has no effect on the direction of Thornburg Value i.e., Thornburg Value and Perkins Mid go up and down completely randomly.

Pair Corralation between Thornburg Value and Perkins Mid

Assuming the 90 days horizon Thornburg Value Fund is expected to generate 0.87 times more return on investment than Perkins Mid. However, Thornburg Value Fund is 1.15 times less risky than Perkins Mid. It trades about -0.2 of its potential returns per unit of risk. Perkins Mid Cap is currently generating about -0.18 per unit of risk. If you would invest  9,062  in Thornburg Value Fund on December 4, 2024 and sell it today you would lose (1,254) from holding Thornburg Value Fund or give up 13.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Thornburg Value Fund  vs.  Perkins Mid Cap

Thornburg Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thornburg Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Perkins Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perkins Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Thornburg Value and Perkins Mid

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

The idea behind Thornburg Value Fund and Perkins Mid Cap 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.