Correlation Between Thornburg International and Henderson International
Can any of the company-specific risk be diversified away by investing in both Thornburg International and Henderson 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 Thornburg International and Henderson International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg International Value and Henderson International Opportunities, you can compare the effects of market volatilities on Thornburg International and Henderson 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 Thornburg International with a short position of Henderson International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg International and Henderson International.
Diversification Opportunities for Thornburg International and Henderson International
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thornburg and Henderson is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg International Value and Henderson International Opport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson International and Thornburg International 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 International Value are associated (or correlated) with Henderson International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson International has no effect on the direction of Thornburg International i.e., Thornburg International and Henderson International go up and down completely randomly.
Pair Corralation between Thornburg International and Henderson International
If you would invest 1,957 in Henderson International Opportunities on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Henderson International Opportunities or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Thornburg International Value vs. Henderson International Opport
Performance |
| Timeline |
| Thornburg International |
| Henderson International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Thornburg International and Henderson International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg International and Henderson International
The main advantage of trading using opposite Thornburg International and Henderson International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg International position performs unexpectedly, Henderson 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 Henderson International will offset losses from the drop in Henderson International's long position.The idea behind Thornburg International Value and Henderson International Opportunities 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.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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