Correlation Between Templeton Global and Thornburg Investment

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

By analyzing existing cross correlation between Templeton Global Bond and Thornburg Investment Income, you can compare the effects of market volatilities on Templeton Global and Thornburg Investment 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 Templeton Global with a short position of Thornburg Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Thornburg Investment.

Diversification Opportunities for Templeton Global and Thornburg Investment

0.95

Correlation Coefficient

Templeton Global  Thornburg Investment

Almost no diversification

The 3 months correlation between Templeton and Thornburg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Thornburg Investment Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Investment and Templeton Global 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 Templeton Global Bond are associated (or correlated) with Thornburg Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Investment has no effect on the direction of Templeton Global i.e., Templeton Global and Thornburg Investment go up and down completely randomly.

Pair Corralation between Templeton Global and Thornburg Investment

Assuming the 90 days horizon Templeton Global is expected to generate 1.71 times less return on investment than Thornburg Investment. But when comparing it to its historical volatility, Templeton Global Bond is 1.2 times less risky than Thornburg Investment. It trades about 0.18 of its potential returns per unit of risk. Thornburg Investment Income is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,554  in Thornburg Investment Income on December 31, 2024 and sell it today you would earn a total of  206.00  from holding Thornburg Investment Income or generate 8.07% return on investment over 90 days.

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

Templeton Global Bond  vs.  Thornburg Investment Income

Templeton Global Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Global Bond are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Templeton Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thornburg Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Investment Income are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Thornburg Investment may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Templeton Global and Thornburg Investment

The main advantage of trading using opposite Templeton Global and Thornburg Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global position performs unexpectedly, Thornburg Investment 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 Investment will offset losses from the drop in Thornburg Investment's long position.

The idea behind Templeton Global Bond and Thornburg Investment Income 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.