Correlation Between Capital World and Thornburg Global
Can any of the company-specific risk be diversified away by investing in both Capital World 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 Capital World and Thornburg Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Thornburg Global Opportunities, you can compare the effects of market volatilities on Capital World 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 Capital World with a short position of Thornburg Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Thornburg Global.
Diversification Opportunities for Capital World and Thornburg Global
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Thornburg is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth 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 Capital World 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 Capital World Growth 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 Capital World i.e., Capital World and Thornburg Global go up and down completely randomly.
Pair Corralation between Capital World and Thornburg Global
Assuming the 90 days horizon Capital World Growth is expected to generate 0.95 times more return on investment than Thornburg Global. However, Capital World Growth is 1.06 times less risky than Thornburg Global. It trades about 0.09 of its potential returns per unit of risk. Thornburg Global Opportunities is currently generating about 0.05 per unit of risk. If you would invest 5,058 in Capital World Growth on September 4, 2024 and sell it today you would earn a total of 1,843 from holding Capital World Growth or generate 36.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Thornburg Global Opportunities
Performance |
| Timeline |
| Capital World Growth |
| Thornburg Global Opp |
Capital World and Thornburg Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Thornburg Global
The main advantage of trading using opposite Capital World and Thornburg Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World 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.| Capital World vs. Income Fund Of | Capital World vs. New World Fund | Capital World vs. American Mutual Fund | Capital World vs. American Mutual Fund |
| Thornburg Global vs. Thornburg Global Opportunities | Thornburg Global vs. Gmo Emerging Ntry | Thornburg Global vs. T Rowe Price | Thornburg Global vs. Tarkio Fund Tarkio |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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