Correlation Between Henderson European and Thornburg International
Can any of the company-specific risk be diversified away by investing in both Henderson European and Thornburg International 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 Henderson European and Thornburg International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson European Focus and Thornburg International Value, you can compare the effects of market volatilities on Henderson European and Thornburg International 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 Henderson European with a short position of Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson European and Thornburg International.
Diversification Opportunities for Henderson European and Thornburg International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Henderson and Thornburg is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Henderson European Focus and Thornburg International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Henderson European 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 Henderson European Focus are associated (or correlated) with Thornburg International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg International has no effect on the direction of Henderson European i.e., Henderson European and Thornburg International go up and down completely randomly.
Pair Corralation between Henderson European and Thornburg International
Assuming the 90 days horizon Henderson European Focus is expected to generate 0.73 times more return on investment than Thornburg International. However, Henderson European Focus is 1.36 times less risky than Thornburg International. It trades about -0.06 of its potential returns per unit of risk. Thornburg International Value is currently generating about -0.22 per unit of risk. If you would invest 4,706 in Henderson European Focus on September 1, 2024 and sell it today you would lose (58.00) from holding Henderson European Focus or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Henderson European Focus vs. Thornburg International Value
Performance |
| Timeline |
| Henderson European Focus |
| Thornburg International |
Henderson European and Thornburg International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson European and Thornburg International
The main advantage of trading using opposite Henderson European and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson European position performs unexpectedly, Thornburg International 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 International will offset losses from the drop in Thornburg International's long position.| Henderson European vs. Invesco European Small | Henderson European vs. Henderson European Focus | Henderson European vs. Invesco European Growth | Henderson European vs. Jpmorgan Intrepid European |
| Thornburg International vs. Growth Fund Of | Thornburg International vs. Loomis Sayles Strategic | Thornburg International vs. Oppenheimer International Bond | Thornburg International vs. Thornburg E Growth |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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