Correlation Between Precious Metals and Thornburg Global

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

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

Diversification Opportunities for Precious Metals and Thornburg Global

0.57

Correlation Coefficient

Precious Metals  Thornburg Global

Very weak diversification

The 3 months correlation between Precious and Thornburg is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Thornburg Global Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Global Opp and Precious Metals 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 Precious Metals And are associated (or correlated) with Thornburg Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Global Opp has no effect on the direction of Precious Metals i.e., Precious Metals and Thornburg Global go up and down completely randomly.

Pair Corralation between Precious Metals and Thornburg Global

Assuming the 90 days horizon Precious Metals And is expected to under-perform the Thornburg Global. In addition to that, Precious Metals is 2.59 times more volatile than Thornburg Global Opportunities. It trades about -0.03 of its total potential returns per unit of risk. Thornburg Global Opportunities is currently generating about -0.01 per unit of volatility. If you would invest  3,857  in Thornburg Global Opportunities on September 17, 2024 and sell it today you would lose (28.00) from holding Thornburg Global Opportunities or give up 0.73% of portfolio value over 90 days.

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

Precious Metals And  vs.  Thornburg Global Opportunities

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thornburg Global Opp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Precious Metals and Thornburg Global

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

The idea behind Precious Metals And and Thornburg Global Opportunities 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.