Correlation Between Thornburg Global and Tarkio Fund

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

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

Diversification Opportunities for Thornburg Global and Tarkio Fund

0.04

Correlation Coefficient

Thornburg Global  Tarkio Fund

Significant diversification

The 3 months correlation between THORNBURG and Tarkio is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Global Opportunities and Tarkio Fund Tarkio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarkio Fund Tarkio and Thornburg Global 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 Global Opportunities are associated (or correlated) with Tarkio Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarkio Fund Tarkio has no effect on the direction of Thornburg Global i.e., Thornburg Global and Tarkio Fund go up and down completely randomly.

Pair Corralation between Thornburg Global and Tarkio Fund

Assuming the 90 days horizon Thornburg Global Opportunities is expected to under-perform the Tarkio Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Thornburg Global Opportunities is 2.83 times less risky than Tarkio Fund. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Tarkio Fund Tarkio is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,052  in Tarkio Fund Tarkio on September 5, 2024 and sell it today you would earn a total of  144.00  from holding Tarkio Fund Tarkio or generate 4.72% return on investment over 90 days.

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

Thornburg Global Opportunities  vs.  Tarkio Fund Tarkio

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 forward indicators, Thornburg Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tarkio Fund Tarkio

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tarkio Fund Tarkio are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Tarkio Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thornburg Global and Tarkio Fund

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

The idea behind Thornburg Global Opportunities and Tarkio Fund Tarkio 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.