Correlation Between Thornburg International and Thornburg Global
Can any of the company-specific risk be diversified away by investing in both Thornburg International and Thornburg Global 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 Thornburg Global 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 Thornburg Global Opportunities, you can compare the effects of market volatilities on Thornburg International and Thornburg Global 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 Thornburg Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg International and Thornburg Global.
Diversification Opportunities for Thornburg International and Thornburg Global
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thornburg and Thornburg is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg International Growth and Thornburg Global Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Global Opp 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 Thornburg Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Global Opp has no effect on the direction of Thornburg International i.e., Thornburg International and Thornburg Global go up and down completely randomly.
Pair Corralation between Thornburg International and Thornburg Global
Assuming the 90 days horizon Thornburg International Growth is expected to under-perform the Thornburg Global. In addition to that, Thornburg International is 2.3 times more volatile than Thornburg Global Opportunities. It trades about -0.19 of its total potential returns per unit of risk. Thornburg Global Opportunities is currently generating about -0.03 per unit of volatility. If you would invest 3,878 in Thornburg Global Opportunities on September 13, 2024 and sell it today you would lose (22.00) from holding Thornburg Global Opportunities or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg International Growth vs. Thornburg Global Opportunities
Performance |
| Timeline |
| Thornburg International |
| Thornburg Global Opp |
Thornburg International and Thornburg Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg International and Thornburg Global
The main advantage of trading using opposite Thornburg International and Thornburg Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg International position performs unexpectedly, Thornburg Global 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 Global will offset losses from the drop in Thornburg Global's long position.The idea behind Thornburg International Growth and Thornburg Global Opportunities 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.
| Thornburg Global vs. Thornburg Investment Income | Thornburg Global vs. Oppenheimer Global | Thornburg Global vs. Thornburg Developing World | Thornburg Global vs. Thornburg International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |