Correlation Between Thornburg International and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Thornburg International and Vanguard Total 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 Vanguard Total 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 Vanguard Total International, you can compare the effects of market volatilities on Thornburg International and Vanguard Total 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 Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg International and Vanguard Total.
Diversification Opportunities for Thornburg International and Vanguard Total
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thornburg and Vanguard is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg International Value and Vanguard Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of Thornburg International i.e., Thornburg International and Vanguard Total go up and down completely randomly.
Pair Corralation between Thornburg International and Vanguard Total
Assuming the 90 days horizon Thornburg International is expected to generate 1.01 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, Thornburg International Value is 1.02 times less risky than Vanguard Total. It trades about 0.06 of its potential returns per unit of risk. Vanguard Total International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,627 in Vanguard Total International on September 4, 2024 and sell it today you would earn a total of 358.00 from holding Vanguard Total International or generate 22.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg International Value vs. Vanguard Total International
Performance |
| Timeline |
| Thornburg International |
| Vanguard Total Inter |
Thornburg International and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg International and Vanguard Total
The main advantage of trading using opposite Thornburg International and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg International position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| Thornburg International vs. Total Return Fund | Thornburg International vs. Blackrock Gbl Alloc | Thornburg International vs. Blackrock Eq Dividend | Thornburg International vs. Davis New York |
| Vanguard Total vs. Ab Global Risk | Vanguard Total vs. Gmo High Yield | Vanguard Total vs. Vanguard Star Fund | Vanguard Total vs. Artisan High Income |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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