Correlation Between Thornburg Investment and Thornburg International
Can any of the company-specific risk be diversified away by investing in both Thornburg Investment 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 Investment 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 Investment Income and Thornburg International Growth, you can compare the effects of market volatilities on Thornburg Investment 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 Investment with a short position of Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Investment and Thornburg International.
Diversification Opportunities for Thornburg Investment and Thornburg International
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thornburg and Thornburg is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Investment Income and Thornburg International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Thornburg Investment 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 Investment Income 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 Investment i.e., Thornburg Investment and Thornburg International go up and down completely randomly.
Pair Corralation between Thornburg Investment and Thornburg International
Assuming the 90 days horizon Thornburg Investment Income is expected to generate 0.2 times more return on investment than Thornburg International. However, Thornburg Investment Income is 5.05 times less risky than Thornburg International. It trades about 0.08 of its potential returns per unit of risk. Thornburg International Growth is currently generating about -0.2 per unit of risk. If you would invest 2,553 in Thornburg Investment Income on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Thornburg Investment Income or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg Investment Income vs. Thornburg International Growth
Performance |
| Timeline |
| Thornburg Investment |
| Thornburg International |
Thornburg Investment and Thornburg International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg Investment and Thornburg International
The main advantage of trading using opposite Thornburg Investment and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Investment 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 Investment vs. Franklin Income Fund | Thornburg Investment vs. Jpmorgan Income Builder | Thornburg Investment vs. First Eagle Global | Thornburg Investment vs. Ivy Asset Strategy |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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