Correlation Between Thornburg Income and Reaves Utility

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

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

Diversification Opportunities for Thornburg Income and Reaves Utility

0.73

Correlation Coefficient

Thornburg Income  Reaves Utility

Poor diversification

The 3 months correlation between Thornburg and Reaves is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Income Builder and Reaves Utility If in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reaves Utility If and Thornburg Income 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 Income Builder are associated (or correlated) with Reaves Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reaves Utility If has no effect on the direction of Thornburg Income i.e., Thornburg Income and Reaves Utility go up and down completely randomly.

Pair Corralation between Thornburg Income and Reaves Utility

Given the investment horizon of 90 days Thornburg Income is expected to generate 7.06 times less return on investment than Reaves Utility. But when comparing it to its historical volatility, Thornburg Income Builder is 1.13 times less risky than Reaves Utility. It trades about 0.04 of its potential returns per unit of risk. Reaves Utility If is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,889  in Reaves Utility If on August 15, 2024 and sell it today you would earn a total of  461.00  from holding Reaves Utility If or generate 15.96% return on investment over 90 days.

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

Thornburg Income Builder  vs.  Reaves Utility If

Thornburg Income Builder

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Income Builder are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Reaves Utility If

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Reaves Utility If are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly inconsistent basic indicators, Reaves Utility reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thornburg Income and Reaves Utility

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

The idea behind Thornburg Income Builder and Reaves Utility If 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.