Correlation Between Thornburg International and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Thornburg International and Emerging Markets 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 Emerging Markets 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 The Emerging Markets, you can compare the effects of market volatilities on Thornburg International and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg International and Emerging Markets.
Diversification Opportunities for Thornburg International and Emerging Markets
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thornburg and Emerging is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg International Value and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Thornburg International i.e., Thornburg International and Emerging Markets go up and down completely randomly.
Pair Corralation between Thornburg International and Emerging Markets
Assuming the 90 days horizon Thornburg International Value is expected to generate 0.85 times more return on investment than Emerging Markets. However, Thornburg International Value is 1.17 times less risky than Emerging Markets. It trades about 0.07 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.06 per unit of risk. If you would invest 2,233 in Thornburg International Value on September 12, 2024 and sell it today you would earn a total of 363.00 from holding Thornburg International Value or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg International Value vs. The Emerging Markets
Performance |
| Timeline |
| Thornburg International |
| Emerging Markets |
Thornburg International and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg International and Emerging Markets
The main advantage of trading using opposite Thornburg International and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg International position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Thornburg International vs. Artisan Select Equity | Thornburg International vs. Multimedia Portfolio Multimedia | Thornburg International vs. Cutler Equity | Thornburg International vs. Ms Global Fixed |
| Emerging Markets vs. Ab Global Risk | Emerging Markets vs. Jhancock Global Equity | Emerging Markets vs. Kinetics Global Fund | Emerging Markets vs. Ab Global Real |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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