Correlation Between Thornburg International and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Thornburg International and Fidelity 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 International and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg International Growth and Fidelity International Growth, you can compare the effects of market volatilities on Thornburg International and Fidelity 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 International with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg International and Fidelity International.
Diversification Opportunities for Thornburg International and Fidelity International
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thornburg and Fidelity is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg International Growth and Fidelity International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International 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 Growth are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Thornburg International i.e., Thornburg International and Fidelity International go up and down completely randomly.
Pair Corralation between Thornburg International and Fidelity International
Assuming the 90 days horizon Thornburg International Growth is expected to under-perform the Fidelity International. In addition to that, Thornburg International is 1.37 times more volatile than Fidelity International Growth. It trades about -0.15 of its total potential returns per unit of risk. Fidelity International Growth is currently generating about 0.01 per unit of volatility. If you would invest 2,093 in Fidelity International Growth on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Fidelity International Growth or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg International Growth vs. Fidelity International Growth
Performance |
| Timeline |
| Thornburg International |
| Fidelity International |
Thornburg International and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg International and Fidelity International
The main advantage of trading using opposite Thornburg International and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg International position performs unexpectedly, Fidelity 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 Fidelity International will offset losses from the drop in Fidelity International's long position.The idea behind Thornburg International Growth and Fidelity International Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stocks Directory Find actively traded stocks across global markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |