Correlation Between Dynamic International and Thornburg International

Can any of the company-specific risk be diversified away by investing in both Dynamic International 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 Dynamic International and Thornburg International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dynamic International Opportunity and Thornburg International Growth, you can compare the effects of market volatilities on Dynamic International 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 Dynamic International with a short position of Thornburg International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic International and Thornburg International.

Diversification Opportunities for Dynamic International and Thornburg International

0.71

Correlation Coefficient

Dynamic International  Thornburg International

Poor diversification

The 3 months correlation between Dynamic and Thornburg is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic International Opportun and Thornburg International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Dynamic 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 Dynamic International Opportunity 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 Dynamic International i.e., Dynamic International and Thornburg International go up and down completely randomly.

Pair Corralation between Dynamic International and Thornburg International

Assuming the 90 days horizon Dynamic International Opportunity is expected to generate 0.77 times more return on investment than Thornburg International. However, Dynamic International Opportunity is 1.29 times less risky than Thornburg International. It trades about 0.14 of its potential returns per unit of risk. Thornburg International Growth is currently generating about 0.03 per unit of risk. If you would invest  1,172  in Dynamic International Opportunity on December 22, 2024 and sell it today you would earn a total of  77.00  from holding Dynamic International Opportunity or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dynamic International Opportun  vs.  Thornburg International Growth

Dynamic International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic International Opportunity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dynamic International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Thornburg International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg International Growth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thornburg International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dynamic International and Thornburg International

The main advantage of trading using opposite Dynamic International and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic International 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.

The idea behind Dynamic International Opportunity and Thornburg 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.