Correlation Between Henderson European and Thornburg Investment
Can any of the company-specific risk be diversified away by investing in both Henderson European and Thornburg Investment 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 Investment 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 Investment Income, you can compare the effects of market volatilities on Henderson European and Thornburg Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson European and Thornburg Investment.
Diversification Opportunities for Henderson European and Thornburg Investment
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Henderson and Thornburg is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Henderson European Focus and Thornburg Investment Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Investment 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Investment has no effect on the direction of Henderson European i.e., Henderson European and Thornburg Investment go up and down completely randomly.
Pair Corralation between Henderson European and Thornburg Investment
Assuming the 90 days horizon Henderson European is expected to generate 2.08 times less return on investment than Thornburg Investment. In addition to that, Henderson European is 1.73 times more volatile than Thornburg Investment Income. It trades about 0.03 of its total potential returns per unit of risk. Thornburg Investment Income is currently generating about 0.12 per unit of volatility. If you would invest 2,190 in Thornburg Investment Income on August 25, 2024 and sell it today you would earn a total of 371.00 from holding Thornburg Investment Income or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henderson European Focus vs. Thornburg Investment Income
Performance |
| Timeline |
| Henderson European Focus |
| Thornburg Investment |
Henderson European and Thornburg Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson European and Thornburg Investment
The main advantage of trading using opposite Henderson European and Thornburg Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson European position performs unexpectedly, Thornburg Investment 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 Investment will offset losses from the drop in Thornburg Investment'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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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