Correlation Between Stellar and Thornburg Investment

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

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

Diversification Opportunities for Stellar and Thornburg Investment

-0.34

Correlation Coefficient

Stellar  Thornburg Investment

Very good diversification

The 3 months correlation between Stellar and Thornburg is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Thornburg Investment Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Investment and Stellar 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 Stellar 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 Stellar i.e., Stellar and Thornburg Investment go up and down completely randomly.

Pair Corralation between Stellar and Thornburg Investment

Assuming the 90 days trading horizon Stellar is expected to generate 16.82 times more return on investment than Thornburg Investment. However, Stellar is 16.82 times more volatile than Thornburg Investment Income. It trades about 0.15 of its potential returns per unit of risk. Thornburg Investment Income is currently generating about 0.34 per unit of risk. If you would invest  35.00  in Stellar on October 26, 2024 and sell it today you would earn a total of  8.00  from holding Stellar or generate 22.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Stellar  vs.  Thornburg Investment Income

Stellar

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Thornburg Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Investment Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thornburg Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stellar and Thornburg Investment

The main advantage of trading using opposite Stellar and Thornburg Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.