Correlation Between BlackRock Floating and Thornburg Income

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

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

Diversification Opportunities for BlackRock Floating and Thornburg Income

-0.29

Correlation Coefficient

BlackRock Floating  Thornburg Income

Very good diversification

The 3 months correlation between BlackRock and Thornburg is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Floating Rate and Thornburg Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Income Builder and BlackRock Floating 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 BlackRock Floating Rate are associated (or correlated) with Thornburg Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Income Builder has no effect on the direction of BlackRock Floating i.e., BlackRock Floating and Thornburg Income go up and down completely randomly.

Pair Corralation between BlackRock Floating and Thornburg Income

Considering the 90-day investment horizon BlackRock Floating Rate is expected to generate 0.84 times more return on investment than Thornburg Income. However, BlackRock Floating Rate is 1.2 times less risky than Thornburg Income. It trades about 0.14 of its potential returns per unit of risk. Thornburg Income Builder is currently generating about 0.01 per unit of risk. If you would invest  1,238  in BlackRock Floating Rate on September 1, 2024 and sell it today you would earn a total of  69.00  from holding BlackRock Floating Rate or generate 5.57% return on investment over 90 days.

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

BlackRock Floating Rate  vs.  Thornburg Income Builder

BlackRock Floating Rate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Floating Rate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, BlackRock Floating is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Thornburg Income Builder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thornburg Income Builder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Thornburg Income is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlackRock Floating and Thornburg Income

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

The idea behind BlackRock Floating Rate and Thornburg Income Builder 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.