Correlation Between Thornburg Developing and Thornburg International
Can any of the company-specific risk be diversified away by investing in both Thornburg Developing 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 Thornburg Developing and Thornburg International 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 Thornburg International Value, you can compare the effects of market volatilities on Thornburg Developing 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 Thornburg Developing with a short position of Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Developing and Thornburg International.
Diversification Opportunities for Thornburg Developing and Thornburg International
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thornburg and Thornburg is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Developing World and Thornburg International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International 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 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 Thornburg Developing i.e., Thornburg Developing and Thornburg International go up and down completely randomly.
Pair Corralation between Thornburg Developing and Thornburg International
Assuming the 90 days horizon Thornburg Developing World is expected to generate 0.54 times more return on investment than Thornburg International. However, Thornburg Developing World is 1.86 times less risky than Thornburg International. It trades about -0.22 of its potential returns per unit of risk. Thornburg International Value is currently generating about -0.3 per unit of risk. If you would invest 2,119 in Thornburg Developing World on August 26, 2024 and sell it today you would lose (68.00) from holding Thornburg Developing World or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg Developing World vs. Thornburg International Value
Performance |
| Timeline |
| Thornburg Developing |
| Thornburg International |
Thornburg Developing and Thornburg International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg Developing and Thornburg International
The main advantage of trading using opposite Thornburg Developing and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Developing 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.| Thornburg Developing vs. Franklin Government Money | Thornburg Developing vs. Legg Mason Partners | Thornburg Developing vs. T Rowe Price | Thornburg Developing vs. Dreyfus Institutional Reserves |
| Thornburg International vs. Growth Fund Of | Thornburg International vs. Loomis Sayles Strategic | Thornburg International vs. Oppenheimer International Bond | Thornburg International vs. Thornburg E Growth |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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