Correlation Between Total Return and Thornburg International
Can any of the company-specific risk be diversified away by investing in both Total Return 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 Total Return and Thornburg International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Return Fund and Thornburg International Value, you can compare the effects of market volatilities on Total Return 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 Total Return with a short position of Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Return and Thornburg International.
Diversification Opportunities for Total Return and Thornburg International
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Total and Thornburg is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Fund and Thornburg International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Total Return 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 Total Return Fund 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 Total Return i.e., Total Return and Thornburg International go up and down completely randomly.
Pair Corralation between Total Return and Thornburg International
Assuming the 90 days horizon Total Return is expected to generate 1.58 times less return on investment than Thornburg International. But when comparing it to its historical volatility, Total Return Fund is 2.14 times less risky than Thornburg International. It trades about 0.07 of its potential returns per unit of risk. Thornburg International Value is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,989 in Thornburg International Value on September 15, 2024 and sell it today you would earn a total of 221.00 from holding Thornburg International Value or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Return Fund vs. Thornburg International Value
Performance |
| Timeline |
| Total Return |
| Thornburg International |
Total Return and Thornburg International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Return and Thornburg International
The main advantage of trading using opposite Total Return and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Return 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.| Total Return vs. Transamerica Intermediate Muni | Total Return vs. T Rowe Price | Total Return vs. Gamco Global Telecommunications | Total Return vs. Oklahoma Municipal Fund |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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