Correlation Between Thornburg Developing and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Thornburg Developing and Vanguard Emerging 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 Developing and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg Developing World and Vanguard Emerging Markets, you can compare the effects of market volatilities on Thornburg Developing and Vanguard Emerging 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 Developing with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Developing and Vanguard Emerging.
Diversification Opportunities for Thornburg Developing and Vanguard Emerging
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Thornburg and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Developing World and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets and Thornburg Developing 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 Developing World are associated (or correlated) with Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Thornburg Developing i.e., Thornburg Developing and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Thornburg Developing and Vanguard Emerging
Assuming the 90 days horizon Thornburg Developing is expected to generate 2.65 times less return on investment than Vanguard Emerging. In addition to that, Thornburg Developing is 1.07 times more volatile than Vanguard Emerging Markets. It trades about 0.02 of its total potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.07 per unit of volatility. If you would invest 3,406 in Vanguard Emerging Markets on September 1, 2024 and sell it today you would earn a total of 365.00 from holding Vanguard Emerging Markets or generate 10.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Thornburg Developing World vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Thornburg Developing |
| Vanguard Emerging Markets |
Thornburg Developing and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg Developing and Vanguard Emerging
The main advantage of trading using opposite Thornburg Developing and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Developing position performs unexpectedly, Vanguard Emerging 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 Emerging will offset losses from the drop in Vanguard Emerging's long position.| Thornburg Developing vs. Thornburg Value Fund | Thornburg Developing vs. Thornburg Value Fund | Thornburg Developing vs. Thornburg International Value | Thornburg Developing vs. Thornburg International Value |
| Vanguard Emerging vs. Vanguard Developed Markets | Vanguard Emerging vs. Vanguard Reit Index | Vanguard Emerging vs. Vanguard Small Cap Index | Vanguard Emerging vs. Vanguard European Stock |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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