Correlation Between Growth Strategy and Thornburg International

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

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

Diversification Opportunities for Growth Strategy and Thornburg International

0.16

Correlation Coefficient

Growth Strategy  Thornburg International

Average diversification

The 3 months correlation between Growth and Thornburg is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Thornburg International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg International and Growth Strategy 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 Growth Strategy Fund 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 Growth Strategy i.e., Growth Strategy and Thornburg International go up and down completely randomly.

Pair Corralation between Growth Strategy and Thornburg International

Assuming the 90 days horizon Growth Strategy Fund is expected to generate 1.04 times more return on investment than Thornburg International. However, Growth Strategy is 1.04 times more volatile than Thornburg International Value. It trades about -0.31 of its potential returns per unit of risk. Thornburg International Value is currently generating about -0.37 per unit of risk. If you would invest  1,308  in Growth Strategy Fund on October 8, 2024 and sell it today you would lose (54.00) from holding Growth Strategy Fund or give up 4.13% of portfolio value over 90 days.

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

Growth Strategy Fund  vs.  Thornburg International Value

Growth Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growth Strategy Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Growth Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thornburg International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thornburg International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Growth Strategy and Thornburg International

The main advantage of trading using opposite Growth Strategy and Thornburg International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy 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 Growth Strategy Fund and Thornburg International Value 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.