Correlation Between Vanguard Total and Thornburg International
Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Vanguard Total and Thornburg International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total International and Thornburg International Value, you can compare the effects of market volatilities on Vanguard Total 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 Vanguard Total with a short position of Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Thornburg International.
Diversification Opportunities for Vanguard Total and Thornburg International
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Thornburg is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Thornburg International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Vanguard Total 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 Vanguard Total International 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 Vanguard Total i.e., Vanguard Total and Thornburg International go up and down completely randomly.
Pair Corralation between Vanguard Total and Thornburg International
Assuming the 90 days horizon Vanguard Total is expected to generate 1.06 times less return on investment than Thornburg International. In addition to that, Vanguard Total is 1.03 times more volatile than Thornburg International Value. It trades about 0.06 of its total potential returns per unit of risk. Thornburg International Value is currently generating about 0.06 per unit of volatility. If you would invest 2,176 in Thornburg International Value on August 29, 2024 and sell it today you would earn a total of 520.00 from holding Thornburg International Value or generate 23.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total International vs. Thornburg International Value
Performance |
| Timeline |
| Vanguard Total Inter |
| Thornburg International |
Vanguard Total and Thornburg International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Thornburg International
The main advantage of trading using opposite Vanguard Total and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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.| Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard Extended Market | Vanguard Total vs. Vanguard Small Cap Index | Vanguard Total vs. Vanguard Mid Cap Index |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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